QUESTION 1. (USE THIS FOR PARTS 1-3) Last year Timco paid a 5 per share dividend. The beta is 1.7, the market is expected to earn 11%, and the risk free rate is 2%. If dividends remain at 5 per year forever, what is a fair price? (28.90) Fair Price (P0) = Div / COst of Equity = $ 5 / 17.3% = $ 28.90

PT 1. What if Timcos dividends grow at 6% per year forever? (46.90)

PT 2. Find the dividend yield and capital gains yield for the stock in number 4. (.113 and .06)

PT 3. What if Timcos dividends grow at 6% for one year, than at 10% forever after that? (72.60)