5b

The Black Forest Cake Company just paid an annual dividend of $2.38. If you expect a constant growth rate of 3.32 percent, and have a required rate of return of 11.18 percent, what is the current stock price according to the constant growth dividend model?

Round the answer to two decimal places.

2c

Try to determine the required rate of return on Tilden Woods Corporations common stock. The firms beta is 2.15. The rate on a 10-year Treasury bond is 2.91 percent, and the market risk premium is 6.30 percent.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Your Answer:

Question 4 (1 point) Potter's Violin Co. has just issued nonconvertible preferred stock with a par value of $100 and an annual dividend rate of 12.26 percent. The preferred stock is currently selling for $131.98 per share. Which rate of return does the investor expect to receive on this stock if the stock is purchased today? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your