1. Consider a stock that will have dividend growth rates in the next three periods of 17%, 7%, and 4%, respectively. The third growth rate remains forever. The company just paid a dividend, D0, of $1.27. The interest rate is 11%. How much are the dividends in periods 1, 2, and 3? Enter your answers rounded to 2 DECIMAL PLACES.
2. A firm is expected to have earnings next year of $5.46 per share and the firm is expected to pay a dividend of $2.61. Investors' required rate of return is 13%. If the sustainable growth rate is 3.5%, what must be the rate of return earned by the firm on its new investments? Enter your answer as a percentage. Enter your answers rounded to 2 DECIMAL PLACES.
3. Strawberry Co. has a stock that has a current price of $37.76. A year from now, the stock is expected to pay a dividend of $1.85 and the price will be $33.78. What is the expected rate of return for this stock? Enter your answers rounded to 2 DECIMAL PLACES.
4. Fortress of Solitude Co. expects an earnings per share of $1.31 and reinvests 30% of its earnings. Management projects a rate of return of 8% on new projects and investors expect a 8% rate of return on the stock. What is the sustainable growth rate? Enter your answer as a percentage. Enter your answers rounded to 2 DECIMAL PLACES.