Q1. Consider the following for a firm. Its stock price (P0) is at $50, its payout ratio (POR) is 0.4, its EPS1 is $2.00, and investor required return is 10%. What is its required rate of return on equity?

Q2. You own a stock that is currently selling for $50. You expect a dividend of $1.50 next year and you require a 12% rate of return.. What is the dividend growth rate for your stock assuming constant growth?

Q3. What would you pay for a stock expected to pay a $2.50 dividend in one year if the expected dividend growth rate is zero and you require a 10% return on your investment?

Q4. Consider the following for a firm. Its stock price (P0) is at $50, its payout ratio (POR) is 0.4, its EPS1 is $2.00, and investor required return is 10%. What is its dividend yield?

Q5. Consider the following for a firm. Its stock price (P0) is at $50, its payout ratio (POR) is 0.4, its EPS1 is $2.00, and investor required return is 10%.. What is the percent of capital gains?

Q6. What would you pay for a stock expected to pay a $2.25 dividend in one year if the expected dividend growth rate is 3% and you require a 12% return on your investment?

Q7. You are considering investing in ICI. Suppose ICI is currently undergoing expansion and is not expected to change its cash dividend while expanding for the next 4 years. This means that its current annual $3.00 dividend will remain for the next 4 years. After the expansion is completed, higher earnings are expected to result causing a 30% increase in dividends each year for 3 years. After these three years of 30% growth, the dividend growth rate is expected to be 2% per year forever. If the required return for ICI common stock is 11%, what is a share worth today?

Q8. You have500 shares of Royal Oil. Royal is expected to pay a dividend next year of $2.38. The expected dividend growth rate is 6% per year forever. Another of your friend has600 shares of Light House. It has an expected growth rate in dividends of 4% per year forever. It sells for $51.875. It is expected to pay a dividend of $3.35 per share next year. Answer the below questions. (1) If Royal is selling for $29.45 per share, what is yourexpected return on Royal Oil? (2) What is yourfriend expected return on Light House?

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