An investor purchases a stock with a constant dividend of $10/year for a price of $85.  What is the investors rate of return for the stock?

 

2. A stock paid a $3.50 dividend last year.  The dividend is expected to grow at a rate of 2% per year.  What are the next 3 dividends that an investor is expecting to receive?

 

3. A company announces it will pay a $2 and then plans to grow the dividend by 4% a year for the foreseeable future.  If an investor requires a 15% rate of return, what is the maximum price the investor should pay for the stock?

 

4. The price of a stock is $65 and is expected to pay a dividend of $5 that will grow at a 3% rate.  If the investor requires an 11% rate of return, should the investor purchase the stock?

 

5. The stock is currently selling of $112.50 and pays a dividend of $6.50.  If dividends grow at a constant 4% rate, what is the stock's expected dividend yield, capital gains return, and rate of return?

 

6. A company announced that it will start to pay a dividend next year and forecasted dividends for the next several years as follows:
 

Year 1:  $2.00

Year 2:  $4.00

Year 3:  $7.00

Year 4:  $10.00

Year 5:  $12.00

After which it expects dividends to grow by 3%.  If the required rate of return is 12%, what is the expected value of the stock in year 5 and what is the value of the stock today?