1. Gorilla Grips, Inc. will pay a dividend of 3.50 next year. If dividends are expected to grow at a rate of 1.5% going forward, what price should GGI sell for, assuming a required return of 8%?
2. In the previous problem, the dividend stream is an example of what?
3. Iguana Company just paid a $5 dividend. Its dividends are expected to grow at 8% per year for the next 3 years, before reaching a long-run expected growth rate of 3% per year after that. If you require a 14% return on Iguana stock, how much should you pay for it?
4. You work for an investment bank and have been asked to value TTK for an Equity Research Report. You have been provided with a 5-year cash flow forecast and supplemental information below. TTKs growth has been sowing and it is expected to grow at only 2% per year beyond year 5.