Question 13 (1 point) Which of the following statements is correct? None of answers is correct The intrinsic value of a company is the present value of all future cash flows The intrinsic value is just current profits Current earnings account for future cash flows The stock value accounts just for current cash flows but not future cash flows Previous Page Next Page Page 13 of 50 Question 15 (1 point) Metal Corp.just paid $1 dividends and is assumed to grow at 7% per year. The required return of the company is 15%. The present value of the first 60 dividend payments is $13.198. What is the present value of all the dividend payments from year 61 to infinity assuming the required return and the growth rate stay constant? $3.375 O $.11 $13.375 None of the answers is correct $.177 Previous Page Next Page Page 15 of 50 Question 16 (1 point) Texas Corporation just paid a dividend of $1.5 per share. It is assumed that the dividend will continue to grow at a steady rate of 4% per year. Based on this information and a required return of 14%, what would you be willing to pay for the stock today? $15.60 $15.00 None of the answers is correct $20.80 $26.00 Previous Page Next Page Page 16 of 50 Question 17 (1 point) Sun Tech Company is expected to pay $2.57 dividend per share next year. White Tech's dividend is expected to increase by 5% every year. Assume investors require an 11% return on companies such as White Tech Company. Based on the dividend growth model, what is the value of Tech's stock today? $45.94 $43.75 None of the answers is correct $42.83 O $60.42 Previous Page Next Page Page 17 of 50 Question 18 (1 point) The next dividend payment by Tech, Inc., will be $3.00 per share. The dividends are anticipated to maintain a growth rate of 6.00 percent, forever. If the stock currently sells for $53 per share, what is the expected return? None of the answers is correct 12.60% 11.66% 6.00% 12.00% Previous Page Next Page Page 18 of 50 Question 19 (1 point) Bulloch Corporation is expected to pay $2 dividends per share next year (D1). The dividend of this company grows at a steady rate of 6% per year. Based on this information, what will the dividend payment be in four years? $2.53 $4.7 $4.49 $2.38 None of the answers is correct Previous Page Next Page Page 19 of 50 Question 21 (1 point) Real Homes is assumed to pay $1 dividends next year. It expects to have a constant growth of 5%. The firm's required rate of return is 13%. Calculate the price of the stock today. PO = 12.5 PO = 9.125 None of the answers is correct PO = 10.00 PO = 13.125 Previous Page Next Page Page 21 of 50 Question 22 (1 point) The current price of GSU Corporation stock is $26.50 per share. Earnings next year (E1) are expected to be $3 per share and dividends are expected to be $1. The estimated appropriate P/E multiple is 15 (based on the average P/E ratio over the last 5 years). What price would you expect for Eagle's stock next year (P1)? $45.00 $26.50 None of the answers is correct $29.00 $30.00 Previous Page Next Page Page 22 of 50 Question 23 (1 point) Future Wind Corp. earnings per share (EPS) were just announced to be $3.00 for the current year. The company shows a constant dividend payout ratio of 50% and has grown its dividend over the last years at a constant rate of 6%. If the required return on this stock is 10%, what is the current value per share (PO)? $39.75 $75 $79.50 None of the answers is correct $37.50 Previous Page Next Page Page 23 of 50 Question 24 (1 point) Moore & Barker stock pays a constant dividend of $1.50 forever. Assume your required return on the stock is 3.0 percent. What would you be willing to pay for the stock? $445.15 $43.75 None of the answers is correct $46.67 $50.00 Previous Page Next Page Page 24 of 50
