Q8 PII

6. John is evaluating a stock that he believes will pay a dividend equal to $2.75in exactly one year from today. Further, John expects that in addition to the dividend he will be able to sell the stock for the amount $46per share also one year from today. Using this information, what is the stock's price today if the required rate of return on the stock is15.00%?

$__________

Place your answer in dollars and cents without a dollar sign.

7. John is looking to value a particular stock that is expected to pay the dividend of $1.15at the end of each year for at least the next few years. John expects to to be able to sell the stock at the end of year two, just after he receives the dividend in that year, for $63per share. Given this information, what is the estimate of the stock's price today if the required rate of return is12.00%.

$___________

Place your answer in dollars and cents without the dollar sign.

8. The current stock price of Delta Company is $18.00. At the end of the first year the stock is expected to pay a dividend of $1.50per share. Also at the end of the first year the stock is expected to be priced at $20.75.

What is the dividend yield of Delta Company?%___________

What is the capital gain yield of Delta Company?%_______________

In both cases place your answer in percentage form using two decimal places. For example, an answer of say six point seven five percent would be entered 6.75.

9. Troy is interested in buying a particular stock whose current dividend per share is $1.40. Troy estimates that the current dividend per share will increase at a rate of4.15% per year forever. If Troy's estimates are correct, what is the best estimate of the stock price per share if the required rate of return is19.00%.

$____________

Place your answer in dollars and cents. Do not place a dollar sign or comma in your answer.

10. What is the price today (in dollars and cents) of a stock whose dividend per share is currently $2.65and who expects to pay this same dividend per share at the end of each future year forever? That is, the assumption is that the current dividend per share will never change. The stock's required rate of return is8.35%.

$_______________

Do not place a dollar sign or comma in your answer. Work your analysis using at least four decimal places.