Question 1

a) Winter Vine (WV) stock will not pay a dividend until three years from now, and the first dividend is expected to be $2 per share. You predict that the dividend payout ratio is 40% and WV's ROE is 15%. If WVs market capitalization rate is 12%, what is its dividend growth rate?

A.

7%

B.

8%

C.

9%

D.

10%

b)

YKK is currently traded at $87 per share and expects to have EPS of $7 next year. The market capitalization rate for YKK is 16%. What is YKKs net present value of growth opportunity?

	A.	$52.58
	B.	$21.35
	C.	$39.77
	D.	$43.25