STOCK VALUATION

a) Pure Ltd. just paid a dividend of $5.00 per share, and this dividend is expected to grow 7 percent a year for the next 2 years and then at 4 percent a year thereafter. What is the expected dividend per share for each of the next 3 years?

b) Wonder Ltd just paid a dividend of $12.00 per share. The dividend is expected to grow at a constant rate of 9 percent a year. If the required return is 15% what is the companys stock price today?

c) Swirl Plcs current stock price is $30. It is expected that dividends will grow at a constant rate of 4% and will be $1.50 one year from today. Calculate the required return on the companys stock.

d) Baylis Ltd wishes to estimate the value of its outstanding preferred stock. The preferred issue has a $100 par value and pays an annual dividend of 13% per share. Similar risk preferred stocks are currently earning a 5% annual rate of return. What is the market price of the outstanding preferred stock?