Home Best stock traditionally provides an 8% rate of return. The company just paid a $2 a year dividend which is expected to increase by 5% per year. If you are planning on buying 1,000 shares of this stock in two years, how much should you expect to pay per share if the market rate of return for this type of security is 7% at the time of your purchase?

$30.44

$75.13

$115.76

$102.50

$57.88

A stock is selling at $43.75. The company just paid a $2.00 dividend. The rumor is that the dividend will be $2.205 next year. The dividend growth rate is expected to remain constant at the level. What is the required rate of return on the stock?

15.29%

11.07%

13.88%

14.75%

10.04%