54. JJ Companies will pay an annual dividend of $2.10 a share on its common stock next year. Last week,

the company paid a dividend of $2 a share. The company adheres to a constant rate of growth dividend

policy. What will one share of this stock be worth ten years from now if the applicable discount rate is 9

percent?

A. $85.52

B. $81.44

C. $34.21

D. $41.16

E. $52.50

55. Wilton's Market just announced its next annual dividend will be $1.50 a share with future dividends

increasing by 1.8 percent annually. How much will one share of this stock be worth five years from now

if the required return is 15.5 percent?

A. $11.76

B. $11.97

C. $14.14

D. $12.19

E. $13.79

56. Shares of ABBO stock are currently selling for $29.06 a share. The last annual dividend paid was

$1.50 a share and dividends increase at a constant rate. If the market rate of return is 10 percent, what

is the dividend growth rate?

A. 5.32%

B. 4.60%

C. 4.81%

D. 5.05%

E. 4.45%

57. XanEx is a new firm that just paid an annual dividend of $1 a share. The firm plans to increase its

dividend by 20 percent a year for the next four years and then decrease the growth rate to 5 percent

annually. If the required rate of return is 10.25 percent, what is one share of this stock worth today?

A. $33.04

B. $38.19

C. $41.05

D. $31.19

E. $34.81

58. Mario's is going to pay $1, $2.50, and $5 a share over the next three years, respectively. After that,

the company plans to pay annual dividends of $1.25 per share indefinitely. If your required return is 13

percent, how much are you willing to pay for one share today?

A. $13.87

B. $10.87

C. $11.67

D. $12.97

E. $13.67

59. Dille Inc. pays no dividend at the present time. In Years 2 and 3, the firm will pay annual dividends of

$3 a share. After that, it will pay a constant $1 a share dividend indefinitely. What is this stock worth at a

required return of 15 percent?

A. $9.91

B. $7.81

C. $8.62

D. $7.50

E. $11.40

60. Last week, Railway Cabooses paid its annual dividend of $1.20 a share. The company has been

reducing its dividends by 6 percent each year. What is one share of stock worth at a required return of

14 percent?

A. $8.06

B. $5.64

C. $10.80

D. $14.10

E. $15.90

61. ALP Inc. has decided to issue preferred stock with an annual dividend of $4 a share. Similar stocks

are currently yielding 11 percent. What price should the firm expect to receive for each new share

issued?

A. $36.36

B. $40.00

C. $14.92

D. $44.65

E. $18.97

62. The preferred stock of Eastern Shores pays an annual dividend of $6.50 and sells for $42.19 a share.

What is the dividend yield?

A. 2.74%

B. 15.41%

C. 6.50%

D. 6.49%

E. 14.17%

63. What is the maximum price an investor should pay for the common stock of a firm that has no

growth opportunities but pays an annual dividend of $1.85? The market rate of return on similar

securities is 14.5 percent.

A. $9.52

B. $10.88

C. $12.76

D. $17.00

E. $21.18

64. Janlea Co. had total net earnings of $127,000 this past year and paid out 30 percent of those

earnings in dividends. There are 100,000 shares of stock outstanding at a current market price of $11.62

a share. If the dividend growth rate is 5.6 percent, what is the required rate of return?

A. 14.27%

B. 6.56%

C. 8.88%

D. 24.40%

E. 15.60%

65. Snider's Hardwoods adheres to a 40 percent dividend payout policy and has a return on assets of

11.3 percent. The firm's debtequity ratio is .45. What is the firm's rate of growth?

A. 6.78%

B. 7.39%

C. 9.83%

D. 6.55%

E. 4.10%

66. Feltwater Furniture has 120,000 shares of stock outstanding. The firm expects to earn net income of

$325,000 next year with annual increases of 3 percent per year thereafter. The firm also expects to pay

out 75 percent of its net income in dividends and share repurchases. The required return is 14 percent.

What is its share price?

A. $6.16

B. $18.47

C. $11.08

D. $21.09

E. $24.63

67. Tall Tree Timber has net income of $167,000 for the year with 60,000 shares of stock outstanding.

Big Trees is a similar firm with similar growth opportunities and it has 75,000 shares of stock outstanding

with a market price of $32.20 a share and earnings per share of $1.60. What is the estimated value of

Tall Tree Timber?

A. $1,603,210

B. $3,360,875

C. $6,440,000

D. $2,087,500

E. $4,008,325

68. Duncan Street Mills is an allequity firm with 28,000 shares of stock outstanding. The firm expects

sales of $400,000 next year. Sales are expected to grow by 5 percent for the following two years and

then level off to a constant 3 percent growth rate. Net cash flow varies in direct proportion to sales and

is currently equal to 15 percent of sales. The required return for this firm is 16 percent. What is the

estimated current value of one share of stock?

A. $17.02

B. $16.21

C. $16.94

D. $18.76

E. $17.34

69. Westside Motors has expected earnings after taxes for Year 4 of $122,000 and has 25,000

outstanding shares. The current value of the firm's earnings for the next four years, Years 1 through 4, is

$391,600. The comparable PE for the firm is 8.2. What is the estimated value of one share of this stock if

the required rate of return is 15 percent?

A. $54.15

B. $52.09

C. $55.68

D. $61.60

E. $57.87

70. Khloe owns ten percent of KLK Clothing which has a total of 112,000 shares of stock outstanding.

Each share receives one vote for each open seat on the board. The next election will select four new

directors. The market price per share is $48. How much does Khloe need to spend, if any, to guarantee

her election to the board if the firm has a cumulative voting policy?

A. $537,648

B. $1,075,248

C. $770,448

D. $990,648

E. $621,248