I have attached a document that I need some help with. I cannot seem to get the correct answers through formulas, if someone can help, please show the work so I can fully understand.

Thank you!

Valuing Stocks - Chapter 7 Be certain that you have reviewed the PowerPoint for this chapter, then work these problems, in Excel if you'd like, or with pencil paper and calculator - your choice, and submit the answers, with FULL DISCLOSURE of calculations for full credit. THEN Upload your completed document. PART I - Solving for return On page 225, let's work #2 as an example, then solve for credit the problem given..... We must use the formula to solve for R, or Required Return. That formula is R = D1/P +g (see page 210 for an example also) So, D1 = $2.45 because the problem states that the NEXT dividend is that amount. In this example we do not have to "grow" the dividend. IF the problem states that the dividend will be growing after the amount given, we must increase the dividend amount by multiplying by 1 + the growth rate. Then, $2.45/$48.50 = .0.0505 + .055 = .1055 or as a final answer 10.55% 1. Fred is looking at another stock that paid $1.50 per share last year, expects growth of only 3% this year, and has a market price of $20. What will be his actual rate of return if he buys at $20? Remember to grow the $1.50 by the 3%! SHOW YOUR CALCULATION SETUPS LIKE I DID to receive full credit! 2. Let's do another problem to solve for Rate of return: Prudential Insurance stock has been trading lately at $45.88 per share, with expected dividend growth of 4% and paid $.50 in dividends last year. If investors require a 6% return on this stock, are they receiving it? (Remember to grow that 50 cent dividend.) SHOW YOUR CALCULATIONS as I did in the example, for full credit!!! 3. One last Rate of return problem: Principal Financial Group, another Insurance/investment stock has been trading around $36.49, pays a $.45 dividend and expects to increase dividends 4%. If investors desire the same 6% return on this stock as they do the Prudential, are they closer? Prove your answer. (Again, grow the dividend). PART II - Solving for PRICE NOW, let's look at solving for the Price we should pay to attain a certain Rate of Return, based on the dividend. We will use the formula in Example 7.3 on page 207: Price = D1/(R-g) where D1 is the "growth" dividend figure: An example - let's work #4 on page 225 together, then solve a couple more for credit: #4 - the $3.85 is D1, so we don't have to grow it. (But if we did, we would take $3.85 and multiply it by (1 + g), which is 4.75% for a new dividend of $4.033.) so 3.85/(.12 - .0475) = 3.85/.0725 = $53.10 for the final answer 4. NOW, let's try 2 to show we know what we're doing: let's work one where we have to "grow" the dividend: The Surry Company earned $2.00 per share and paid a dividend per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 7 percent per year in the future. Determine the value of the stock: SHOW ALL CALCULATIONS for full credit! a. If the required rate of return is 15% b. If the required rate of return is 12% 5. A final one where we're determining the price, or how much an investor would be willing to pay, based on being given the rate of return, the base dividend, and the rate of growth: What is the maximum that Fred should pay for a stock if it paid a dividend of $1.00 per share last year, expects a growth in dividend of 5% this year, and Fred desires a 12% return on his investment? SHOW CALCULATIONS OR YOU WILL NOT receive full credit