Question
Q1. If current price of stock is $25 and you hold it for one year and received dividend of $2.5. You sold it at $27.
Q1. If current price of stock is $25 and you hold it for one year and received dividend of $2.5. You sold it at $27. How much return you received? Show dividend yield and capital gain separately.
Q2. If investor required return is 20% and capital gain is 8% how much dividend company should pay?
Q3. Current price of stock is $20 and expected price after one year is 22.5. If investor required return is 18%. What percentage of dividend should company pay?
Q4. You own a stock that will start paying $0.50 annually at the end of the year. It has zero growth in future. If the required rate of return is 14%, what should you pay per share?
Q5. You own a stock that will start paying $0.50 annually at the end of the year. It will then grow each year at a constant annual rate of 5%. If the required rate of return is 14%, what should you pay per share?
Q6. What should you pay for a stock assuming you expect the following: a dividend of $1.00 paid at the end of years 1 and 2; cost of equity equal to 8 percent; and, a selling price of $31 at the end of two years?
Q7. Assume that IBM is expected to pay a total cash dividend of $5.60 next year and that dividends are expected to grow at a rate of 5% per year forever. Assuming annual dividend payments, what is the current market value of a share of IBM stock if the required return on IBM common stock is 10%?
Q8. You are considering investing in ICI. Suppose ICI currently paid $3 dividend andenjoying super growth andexpected to pay30%morein dividends each year for 3 years. After these three yearsthe 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?
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