Question 12 (4 points)

Dee's Fashions has a constant growth rate of 3.0 percent and is equally as risky as the market while its stock is currently selling for $69.57 a share. The overall stock market has a return of 15.0 percent and a risk premium of 5.9 percent. What is the Dee's Fashions expected dividend yield? Ender your answer as a whole number to the nearest .1%, thus an answer of 10.1% would be 10.1 rather than 10.1% or .101.

Your Answer:

The stock of Robotic Atlanta Inc. is trading at $21.00 per share. In the past, the firm has paid a constant dividend of $4.83 per share and it has just paid an annual dividend (i.e., D0 = 4.83 ). However, the company will announce today new investments that the market did not know about. It is expected that with these new investments, the dividends will grow at 3.3% forever. Assuming that the discount rate remains the same, what will be the price of the stock after the announcement? Your