Question
Question 4a Stoneworks, Inc., has an odd dividend policy. The company has just paid a dividend of $5 per share and has announced that it
Question 4a
Stoneworks, Inc., has an odd dividend policy. The company has just paid a dividend of $5 per share and has announced that it will increase the dividend by $6 per share for each of the next five years, and then never pay another dividend. If you require a return of 12 percent on the company's stock, how much will you pay for a share today?
(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current Share Price ________ ?
Question 4b
Change, Inc., is expected to maintain a constant 5.4 percent growth rate in its dividends, indefinitely. The company has a dividend yield of 7.2 percent.
What is the required return on the company's stock?
Required Return ________ % ?
(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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