Please answer the question step-by-step in a piece of paper , not the keyboard, and then take a picture of it and post it. Thank you

Valuation Homework

9. A company just paid a dividend of $1.50 and expects high growth of 20% the next two

years and then constant growth of 5% thereafter. If the required rate of return

associated with this stock is 12%, what is the value of the stock today?

* Variable growth practice problem

1. A company is a fast growing technology company. The firm projects a rapid growth of 40 percent for the next two years and

then a growth rate of 20 percent for the following two years. After that, the firm expects a constant-growth rate of 12 percent. The

firm expects to pay its first dividend of $1.25 a year from now. If your required rate of return on such stocks is 20 percent, what is

the current price of the stock?

A. $30.30 B. $15.63 C. $21.70 D. $22.68 E. $18.06

2. A company projects a rapid growth of 30 percent this year and next year and then a growth rate of 8 percent thereafter. The firm

expects to pay its first dividend of $1.25 a year from now. If your required rate of return on such stocks is 20 percent, what is

the current price of the stock?

A. $14.30 B. $13.63 C. $12.33 D. $10.68 E. $11.06

3. A company will not pay a dividend for the first 2 years. In 3 years they anticipate that dividend will be $5 and it will grow 20% for

one year and then have constant growth of 5% forever. If the required rate of return for this stock is 13%, what is the value of the

stock today?

A. $56.40 B. $57.48 C. $59.78 D. $55.44 E. $63.50