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Q-1 Brigapenski Co. has just paid a cash dividend of $2 per share. Investors require a 16% return from investments such as this. If the

Q-1

Brigapenski Co. has just paid a cash dividend of $2 per share. Investors require a 16% return from investments such as this. If the dividend is expected to grow at a steady 8% per year, what is the current value of the stock?

a.

$27

b.

$36.73

c.

$39.68

d.

$25

Q-2

1. Following Question 5, what will the stock be worth in five years?

a.

$27

b.

$25

c.

$39.68

d.

$36.73

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