Quantitative Problem 1t Hubbard Industries just paid a common dividend, Do, of $2.00. It expects to grow at a constant rate of 2 . per yeac. If investori fequire a 9\% raturn on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. 5 per share Zero Growth Stocks: The constant growth model is sufficientiy general to handie the case of a zero growth stock, where the dividend is expected to remain constant over time. In this situation, the equation is: P^0=1n Note that this is the same equation deveioped in Chapter 5 to value a perpetuity, and it is the same equation used to value a perpetual preferred stock that entites its owners to regular, fixed dividend payments in perpetuity, The valuation equation is simply the current dividend divided by the required rate of return. Quantitative Problem 2t Carlysie Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.10 at the end of each year, If investors require an 764 retum on the preferred stock, what is the price of the firm's perpetual preferred stock? Round your answer to the nearest cent. 5 per share Nonconstant Growth Stock: For many companies, is is not appropriate to assume that dividends will grow at a constant rate. Most firms go through life cycies where they expersence different growth rates during differant parts of the cycie. For valuing these firms, the generalited valuation and the constant growth equations are combined to arrive at the nonconstant growth valuation equation: P^0=(1+r0)2Di+(1+c0)2b1++(1+c0)2D+(1+r0)2B^ Bosically, this equation calculates the present value of dividends recelved during the noneonstant growth period and the present value of the stock's hortzon value, which is the value at the horizon date of all dividends expected thereafter. Quantitative Problem 3: Assume todsy is December 31, 2019. Imagine Woris Inc. jusk paid a dividend of \$1.25 per share at the end of 2019. The dividend is expected to erow at 12% par year for 3 years, after which time it is expected to grow at a conctant rate of 5% annually. The compamrs cost of equity (ro) is 9%. Using the dividend orowth model (allowing for noncanstant growth), what ihould be the price of the company's stock today (December 31, 2019)? Do not round intermedate calculations. Round your answer to the nearest cent per share