1. As well you want to buy the stock and your broker says she can buy it for you for $50 per share -- should you buy it and what kind of total profit or loss would you make if you bought 200 shares and sold them at the market price.

A company currently pays a dividend of $2 per share, D0 = $2. It is estimated that the company's

dividend will grow at a rate of 14% per year for the next 2 years, then the dividend

will grow at a constant rate of 7% thereafter. The company's stock has a beta equal to 1.8,

the risk-free rate is 4.5%, and the market risk premium is 4%. What is your estimate of the

stock's current price?

2.Rosendale Clothiers has decided to make significant reinvestments in its operations. As a

Result, it will be suspending dividend payments for 2 years. It anticipates paying a dividend

again in year 3 in the amount of $0.80 per share. The dividend will then be expected to grow

by 20% per year for the following 2 years, then growing at a long-runong run rate of 4% thereafter. If the stock's required return is 11%, what is the value of Rosendale's stock at present?