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please help me solve these problems with step by step explnation!!! wers Inc. currently pays a $1.00 annual dividend, Investors believe that the firm will

please help me solve these problems with step by step explnation!!! image text in transcribed
wers Inc. currently pays a $1.00 annual dividend, Investors believe that the firm will grow vidends at 15% annually for the next 2 years. 10% annually for the two years after that, and 5% wally thereafter. Assume the required return is 10%. What is the current price of the stock? A) $16.77 B) $19.99 C) $27.28 D) $32.98 A multiple-growth rate company pays a current dividend of S1 and is expected to grow at the higher rate of 40% a year for three years at the end of which time the new growth rate is expected to be a constant 8% per year. The required rate of return is 12%. Currently the stock is selling at $65. Which of the following statements is true? A) The investor should not buy the stock since it is overvalued in the market. B) The investor should not buy the stock since it is undervalued in the market. C) The investor should buy the stock since it is undervalued in the market. D) The stock is correctly priced in the market. Suppose NO Growth, Inc. has just issued a dividend of $1.50/share. Subsequent dividends will remain at $1.50 indefinitely. Required rate of return for NO Growth Inc. is 12%. What is the value of one share of the firm's stock? A) $2.90 B) $12.50 C) $29.00 D) $31.25 A risky portfolio pays a 11% rate of return and a T-bill pays 7%. The risk premium on the risky investment is A) 4 percent. B) 5 percent. C) 6 percent. D) 1 percent. . 10. Agricultural Equipment Company has an expected ROE of 12%. The dividend growth rate will ben if the firm follows a policy of paying 40% of earnings in the form of dividends. A) 3.0% B) 4.8% C) 7.2% D) 9.0% 11. The best complete portfolio for a particular investor is designated by: A) The point of highest reward to variability ratio in the opportunity set PS The point of tangency with the opportunity set and the capital allocation line The point of the highest reward to variability ratio in the indifference curve The point of tangency with indifference curve and the capital allocation line

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