Antiques ?R? Us is a mature manufacturing firm. The company just paid a dividend of $11.45, but management expects to reduce the payout by 5.4 percent per year, indefinitely. If you require a return of 11 percent return on this stock, what will you pay for a share today?

Required:

If you require a return of 11 percent return on this stock, what will you pay for a share today

1. Nofal Corporation will pay a $6.35 per share dividend next year. The company pledges to increase its dividend by 5.7 percent per year, indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company's stock today? P0=(6.35X1.057)/.12-.057= 103.23 ??? 2. Suppose you know that a company's stock currently sells for $58 per share and the required return on the stock is 18 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. Required: If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? 3.22 3. Abie, Inc., has an issue of preferred stock outstanding that pays a $3.20 dividend every year, in perpetuity. If this issue currently sells for $74.85 per share, what is the required return? 4.After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. Requirement 1: If Schenkel has 360,000 shares outstanding and the stock currently sells for $39, how much will it cost you to buy a seat if the company uses straight voting? Requirement 2: Assume that Schenkel uses cumulative voting and there are four seats in the current election; how much will it cost you to buy a seat now? 5. E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. Required: If you require a return of 6 percent on this stock, how much should you pay today? 6. Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next four years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $12 per share 5 years from today and will increase the dividend by 5 percent per year thereafter. Required: If the required return on this stock is 12 percent, what is the current share price? 7.Apocalyptica Corporation is expected to pay the following dividends over the next four years: $3, $15, $10, and $3.08. Afterwards, the company pledges to maintain a constant 5 percent growth rate in dividends, forever. Required: If the required return on the stock is 10 percent, what is the current share price? 8. Yang Corp. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. Required: If the required return is 15 percent and the company just paid a $2.50 dividend, what is the current share price? (Hint: Calculate the first four dividends 9.Antiques 'R' Us is a mature manufacturing firm. The company just paid a dividend of $11.45, but management expects to reduce the payout by 5.4 percent per year, indefinitely. Required: If you require a return of 11 percent return on this stock, what will you pay for a share today? 10. You've collected the following information from your favorite financial website. 52-Week Price Hi 36.99 32.90 194.90 41.86 29.92 Lo 13.09 42.81 151.71 23.44 22.82 Div Stock (Div) Yld % Arch Coal 0.64 4.1 Laclede Grp 1.66 4.0 IBM 3.00 1.6 JC Penney 0.80 1.9 Tootsie Roll 0.32 1.3 PE Ratio 20.0 14.2 14.7 45.8 33.9 Close Price 15.43 41.60 192.37 41.77 ?? Net Chg 0.25 -0.31 1.91 0.35 -0.19 According to your research, the growth rate in dividends for Arch Coal for the previous 10 years has been 5.3 percent. Required: If investors feel this growth rate will continue, what is the required return for Arch Coal stock