Meridian Industries just paid a dividend of $2.35. You expect the dividend to grow at 11.50% for the next two years, and then the dividend will grow at 4.00% for the foreseeable future. You estimate the appropriate discount rate is 9.80%. Using this information you estimate the current price for Meridian is closest to:

$43.45.

B.

$48.26.

C.

$44.38.

Shaomin Ltd had earnings per of share of $4.25 last year, earnings are expected to grow at 7.10% over the next twelve months and the forward PE is 18.6. Shaomin's price is closest to:

$79.05.
	B.	$73.81.
	C.	$84.66

Do not do any interim rounding, calculate to at least four decimal places prior to converting to a percentage.

Magnus Inc.'s price is $27.30 a share, their dividend for last year was $1.75, and the long-term sustainable growth rate is 3.25%. The expected return on the stock is closest to:

9.66%.
	B.	6.62%.
	C.	9.87%

Pegasus Tours plans to pay a dividend of $1.20 next year, and they anticipate that dividend payments will grow by 4% every year for the foreseeable future. The market price of the stock is$16. The company's expected rate of return or cost of equity is closest to:

15.38%

B.

12.82%

C.

11.5%.

Zydeco Ind anticipates maintaining its dividend at the current level indefinitely. The most appropriate valuation model would be the:

multistage growth model.
	B.	constant growth model.
	C.	zero growth model.

The PE ratio is useful because it measures:

how much a stock is expected to earn.

B.

how much earnings are going to grow.

C.

how much an investor is willing to pay for $1 of earnings.

The two-stage dividend growth model evaluates the current price of a stock based on the assumption a stock will:

grow at a fixed rate for a period of time after which it will grow at a different rate indefinitely.

B.

increase the dividend amount every year by the same amount.

C.

pay an increasing dividend for a period of time and the cease paying dividends altogether.

The underlying assumption of the dividend discount model is that a stock is worth:

the present value of the future dividends the company pays.
	B.	the same amount as any other stock that pays the same current dividend and has the same required rate of return.
	C.	an amount computed as the next annual dividend divided by the required rate of return.