Question 16

Use the information to answer the following questions. The last dividend paid by Klein Company was $2.00. Klein's growth rate is expected to be a constant 4% for 2 years, after which dividends are expected to grow at a rate of 12% forever. Klein's required rate of return on equity is 15%. What should be the current price of Klein's common stock?

Select one:

a. $33.33

b. $72.25

c. $25.10

d. $64.51

e. $50.16

Question 17

Continued from previous question. What is the dividend yield of Klein's common stock in year 1?

Select one:

a. 4.18%

b. 3.22%

c. 2.00%

d. 1.65%

e. 2.09%

Question 18

Continued from previous question. You would expect the stock price to _____________ in one year.

Select one:

a. Increase by 6.0%

b. Decrease by 9.91%

c. Decrease by 2.09%

d. Increase by 9.82%

e. Increase by 11.78%