A stock paying $5 in annual dividends now (div0 = $5) also sells now for $115 (P0 =$115) and has an expected return of 20%. What might investors expect to pay for the stock one year from now (P1)?

Select one:

a. $132.25

b. $133.00

c. $130.25

d. $118.25

e. None of the above

Stock A has an earnings of $5 per share at year 1. The interest rate is 20%, and the return on equity is 25%. If there is no plow-back, what is the book value of equity per share at the beginning of year 6 ?

Select one:

a. $20.00

b. $21.00

c. $22.00

d. $23.00

e. none of the above