Question
I need help checking my answers. I also need to see how the work is done. I am trying to understand the process and need
I need help checking my answers. I also need to see how the work is done. I am trying to understand the process and need to check my own answers against those of another person.
1.A stock is expected to pay a dividend of $3.00 at the end of the year (D1 = 3.0).The required rate of return is rs = 8%, and the expected constant growth rate is g = 2.0%.What is the stock's current price?
2.Star Manufacturing is expected to pay a dividend of $2.00 per share at the end of the year (D1 = $2.00).The stock sells for $60 per share, and its required rate of return is 11%.The dividend is expected to grow at some constant rate, g, forever.What is the equilibrium expected growth rate?
3.If D0 = $1.20, g (which is constant) = 4%, and P0 = $30.00, what is the stock's expected dividend yield for the coming year?Hint: You need to find D1 first.
4.Atlas Mines has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 3.00 percent annually. The firm just paid an annual dividend of $1.50.
(1) What will the dividend be two years from now?
(2) What will the dividend be five years from now?
(3) What will the dividend be ten years from now?
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