Practice Questions Alex is thinking about investing in Company XYZ. He is aware that last year they paid dividends of $2.10 per share and they do not expect the dividends to change in the future. If the rate of return for similar stock is 10%, what is the anticipated value of the Company XYZ's stock? Carmen has just heard about Company LMN and how investors are buying up their shares which is currently being sold at $32.00 per share. She found out that last year they paid dividends of $1.50 and they anticipate that this dividends would grow at a rate of 15% for years 1 & 2, then it would drop to 10% in years 3 & 4 and finally level off in year 5 with a growth rate of 5% until infinity. If the expected rate of return is 12%, determine the stock value of this stock and would you advise Carmen to invest in this stock? Explain your