The forecast for the Theta Company has its expected earnings

declining for the foreseeable future.

The decline in earnings is expected to be 4.0% annually.

The firm has an expected rate of return of 8.60%.

The most current dividend is $1.25 per share.

What is the current value of the stock?

$5.92

$7.52

$9.52

$8.52

Question 12

4 Points

The current rate of return on US Treasury Bills is 2.10%

The average return on the S&P 500 Index is 11.75%

The beta of the Ringo Corporation is 1.45

The growth rate in dividends is 5%.

The current dividend paid is $3.75 per share.

The current Price of Ringo Stock is $32

Based on the data given, what is the Required Rate of Return on Ringo Stock?

Use the CAPM to solve.

15.25%

17.10%

10.69%

16.09%

Question 13

4 Points

The current rate of return on US Treasury Bills is 2.10%

The average return on the S&P 500 Index is 11.75%

The beta of the Ringo Corporation is 1.45

The growth rate in dividends is 5%.

The current dividend paid is $3.75 per share.

The current Price of Ringo Stock is $32

Based on thr data given, what is the Expected Rate of Return on Ringo Stock?

Use the DDM model.

16.30%

17.30%

15.70%

13.70%