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QUESTION 1

1. Company A has a current stock price of $200 and is expected to pay a $5 dividend in one year. The equity cost of capital is 7.5%. What price would its stock be expected to sell for immediately after it pays the dividend? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer."

QUESTION 2

1. "Company B is expected to pay dividends of $2.5 every 6 months for the next 4 years. If the current price of Company B stock is $20, and Company B's equity cost of capital is 15%. What price would you expect the stock to sell for at the end of 4 years? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer."

QUESTION 3

1. "Company C pays a dividend of $7 per share and is expected to pay this amount indefinitely. The equity cost of capital is 15%. What is the price of the stock? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer."

QUESTION 4

1. "A stock is bought for $40 and sold for $55 1 year later, immediately after it has paid a dividend of $2. What is the capital gain rate for this transaction? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."