Hi, gitaujeff, Thank you for helping last week. Now I have 9 fiance questions, do you want to help for $15?

FIN 370

Homework

Chapter 9

1. A share of common stock has just paid a dividend of $1.50. If the expected long-run growth rate for this stock is 5%, and if investors require a(n) 11% rate of return, what is the price of the stock?

2. A stock is expected to pay a dividend of $2.80 at the end of the year. The required rate of return is r_s = 12.5%, and the expected constant growth rate is 7.5%. What is the current stock price?

3. Johnston Corporation is growing at a constant rate of 6 percent per year. It has both common stock and non-participating preferred stock outstanding. The cost of preferred stock (rp) is 9.5 percent. The par value of the preferred stock is $100, and the stock has a stated dividend of 15 percent of par. What is the market value of the preferred stock?

4. Madison Enterprises' stock is currently sells for $28 per share. The stocks dividend is projected to increase at a constant rate of 7% per year. The required rate of return on the stock, r_s, is 13.6%. What is Madison's expected price 5 years from today?

5. The Corrigan Company just paid a dividend of $1.5 per share, and that dividend is expected to grow at a constant rate of 8% per year in the future. The company's beta is 1.5, the market risk premium is 6%, and the risk-free rate is 2%. What is the company's current stock price?

6. Assume that you plan to buy a share of XYZ stock today and to hold it for 3 years. Your expectations are that you will not receive a dividend at the end of Year 1 and Year 2, but you will receive a dividend of $10.25 at the end of Year 3. In addition, you expect to sell the stock for $135 at the end of Year 3. If your expected rate of return is 16 percent, how much should you be willing to pay for this stock today?

7. Waters Corporation has a stock price of $36 a share. The stocks year-end dividend is expected to be $3 a share. The stocks required rate of return is 12 percent and the stocks dividend is expected to grow at the same constant rate forever. What is the expected price of the stock five years from now?

8. Your company paid a dividend of $2.00 last year. The growth rate is expected to be 4 percent for 1 year, 5 percent the next year, then 6 percent for the following year, and then the growth rate is expected to be a constant 7 percent thereafter. The required rate of return on equity (r_s) is 10 percent. What is the current stock price?

9. A stock that currently trades for $50 per share is expected to pay a year-end dividend of $3 per share. The dividend is expected to grow at a constant rate over time. The stock has a beta of 1.25, the risk-free rate is 4 percent, and the market risk premium is 5 percent. What is the stocks expected price six years from today?