QUESTION 2

1. During the past 8 years, UTX Company common stock dividends have grown from $2.70 to $5.00 per share (currently). Determine the value of UTX common stock to an investor who requires a 16% rate of return, assuming that dividends continue growing for the foreseeable future at the same rate as over the past 8 years.

   	a.	$46.96
   	b.	$62.50
   	c.	$31.25
   	d.	$67.50

0.5 points

QUESTION 3

1. During the past 8 years, Beef Wellington Cattle Company's common stock dividends have grown from $2.00 to $3.19. Estimate the compound annual dividend growth rate over the 8-year period.

   	a.	19%
   	b.	59.5%
   	c.	12%
   	d.	6%

0.5 points

QUESTION 4

1. Dillinger Inc. is planning to raise additional capital for expansion by selling 500,000 common shares at $16 each. The existing stockholders' equity section of its balance sheet is shown below. What will the retained earnings figure be immediately after the sale of the new equity?

   Common stock; $1 par value; authorized, 3,000,000 shares; issued and outstanding, 3,000,000 shares	$3,000,000
   Additional paid-in capital	$6,500,000
   Retained earnings	$4,752,000
   Total stockholders' equity	$14,252,000

   	a.	$14,000,000
   	b.	$12,252,000
   	c.	$4,752,000
   	d.	$3,500,000

0.5 points

QUESTION 5

1. In the constant growth dividend valuation model, it is assumed that the ____.

   	a.	firm is experiencing a period of poor performance, after which normal growth is expected
   	b.	dividend growth rate exceeds the required rate of return
   	c.	firm's future dividend payments are expected to grow at a constant rate forever
   	d.	dividend cannot be forecast for any future time