Finance Stock questions. 5. Assume an all equity firm has been growing at a 20 percent annual rate and is expected to continue to do so for 3 more years. At that time, growth is expected to slow to a constant 5 percent rate. The firm maintains a 40 percent payout ratio, and last year's addition to retained earnings (net of dividends) were $1.5 million. If the market is in equilibrium, what is the market value of the firm's common equity (1 million shares outstanding, R=13%)? a) $17.4 million b) $19.1 million c) $21.9 million d) $28.7 million e) $47.8 million 6) The last dividend just paid by Quantum Inc. was $2.00. Quantums growth rate is expected to be a constant 15 percent for 3 years, after which dividends are expected to grow at a rate of 10 percent forever. Quantum's required rate of return on equity (ks) is 14 percent. What is the current price of Quantum's common stock? a) $62.57 b) $57.13 c) $54.88 d) $53.04 e) $48.14 7) Analysts expect Marble Comics to pay shareholders $1.00 per share annually over the next five years. After that, the dividend will be $1.50 annually forever. Given a discount rate of 10%, what is the value of the stock today? a) $13.10 b) $14.30 c) $15.20 d) $16.10 e) $17.30 8) ABC company is expected to experience a 40% annual growth rate for the next 3 years (years 1-3) and a 25% annual growth rate for the two following years (years 4 and 5). By the end of 5 years, ABCs growth rate will slow to 10% percent per year indefinitely. Stockholder require a return of 12% on ABCs stock. The most recent annual dividend (D0 ), which was just paid yesterday, was $5.00 per share. Calculate the value of the stock today, based on the assumptions above