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Q1. Alfa International Corp. has paid $2.00 annual dividend on common stock and promises that the dividend will grow by 4% per year. If the
Q1. Alfa International Corp. has paid $2.00 annual dividend on common stock and promises that the dividend will grow by 4% per year. If the stock's market price for today is $20, what is the required rate of return? Use the dividend valuation model. Q2. Telda Computers is currently paying dividends of $1.0 per share. These dividends will remain unchanged for the next two years and will grow at a constant rate of 3% thereafter. What would be the current price of Telda Computers share given the required rate of return is 10%? Use the dividend valuation model. Q3. The average industry P/E ratio for IT companies is 27, what is a price of IT company Texas Technology" share, if its expected earning is $1.15 per share? Use P/E approach. Q4. When the founders of XYZ Company made initial public offering, they decided to issue Class A stock to public investors, while keeping Class B stock in their own hands. Class A stock will be entitled to one vote per one share and Class B stock will be entitled to ten votes per one share. Explain briefly why the founders preferred this dual-class stock structure
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