$7-8$ Since it started business $10$ years ago, Alphafem

Company has paid a constant $$1\mathrm{.}20$ per share

dividend to its common stockholders. Next year and

every year thereafter, the company plans to increase

the dividend at a constant rate equal to $2\mathrm{.}5$ percent

per year. If investors require a $15$ percent rate of

return to purchase Alphafem's common stock, what

is the market value of its common stock?

$7-9$ Suppose your company is expected to grow at a

constant rate of $6$ percent long into the future. In

addition, its dividend yield is expected to be

$8$ percent. If your company expects to pay a dividend

equal to $$1\mathrm{.}06$ per share at the end of the year, what is

the value of your firm's stock?

$7-10$ Ocala Company's stock is currently selling for

$$19\mathrm{.}50$ per share. At the end of the year, the company

plans to pay a dividend equal to $$2\mathrm{.}34$ per share. For

the remainder of the company's life, dividends are

expected to grow at a constant rate, and investors

are expected to require a $16$ percent return to invest

in Ocala's stock. What should be the value of Ocala's

stock five years from now?