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%. A. How much are the dividends in periods 1, 2, and 3? (ANSWER ONLY B PLEASE, A WAS ALREADY ANSWERED AS 1.49, 1.59, 1.65) B. Using 1.65 as the dividend in period 3, what is the price of the stock at time 2? Enter your response below rounded to 2 DECIMAL PLACES.
2. 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 answer as a percentage. Enter your response below rounded to 2 DECIMAL PLACES.
3. 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. A. What is the sustainable growth rate? Enter your answer as a percentage. (ANSWER ONLY B PLEASE, A WAS ALREADY ANSWERED AS 2.4). B. Given a growth rate of 2.4%, what is the price of the stock with growth? Enter your response below rounded to 2 DECIMAL PLACES.