7-10

Martha will pay $30 today and expects to receive the following dividends from the purchase of the stocks. At what price does Martha expect to sell the stock for in six year is she faces an opportunity cost of 11.5%? DoggTreat, a partnership for providing cosmetic services for dogs, has paid the following dividends to its shareholders in the past. It plans to continue to pay dividends in the future using the same historical growth rate. As a relatively risky venture, its stock has a beta coefficient of 2.0, a market risk premium of 7.5 %, and a risk free rate of 3.0%. If the market is expected to perform in the way that it has and DoggTreat is expected to continue to employ the same divided policy in the future, what should its stock sell for today? CattyTreat, a partnership for providing cosmetic services for cats, has paid the following dividends to its shareholders in the past. It plans to continue to pay dividends in the future using the same historical growth rate. As a relatively risky venture, its stock has a beta coefficient of 3.0, a market risk premium of 7.5%, and a risk-free rate of 3.0%. If the market is expected to perform in the way, that it has and CattyTreat is expected to continue to employ the same dividend policy in the future, what should its stock sell for today? FannyMable, Inc, a regional confectionery manufacturer plans to roll out product for the holiday season. This expansion is expected to capture a significant share of the market the next five years. Afterwards, its free cash flows are expected to flatten out. FannyMable has just cash dividend of $1.25 and is expected to increase its payout by 15% for the next five years. Afterword plans to pay a constant dividend. FannyMable has a required return of 15 %