For all the questions show your workings and calculations.

1) A Manufacturing Company based in the US just paid a dividend of 12.40. Analysts expect its dividend to grow at a rate of 16 per cent next year, 11 per cent for the following three years, and then a constant rate of 5 per cent thereafter. What is the expected dividend per share at the end of year 6?

A) 14.08

B) 18.98

C) 20.77

D) None of the above values.

2) Summer Co. expects to pay a dividend of $4.00 per shareone year from nowout of earnings of $7.50 per share. If the required rate of return on the stock is 15 percent and its dividends are growing at a constant rate of 10 percent per year, calculate the present value of growth opportunities for the stock (PVGO).

A) $80

B) $30

C) $50

D) $26

3) A manufacturing company just paid a dividend of 1 per share. Analysts expect its dividend to grow at 25 per cent per year for the next three years and then 5 per cent per year thereafter. If the required rate of return on the stock is 18 per cent, what is the current value of the stock?

A) 11.93

B) 12.97

C) 15.20

D) 15.78

4) A mortgage requires 1,000 payment at the end of each of the next five years. What is the present value of these payments at an interest rate of 12 per cent?

A) 6,352.85

B) 3,604.78

C) 2,743.28

D) None of the above

5) A perpetuity starts in three year with a 210,000 payment every year. What is the present value if annual interest rate is 12 per cent?

A) 840,000

B) 354,911

C) 1,750,000

D) None of the above