1. You are considering acquiring shares of stock that you would like to hold for one year. On a per-share basis, you expect to receive $1.22 in dividends and $27.8 from the sale of the share at the end of the year. If you want to earn an 11.5% rate of return, what is the maximum price you would pay for a share today?
2. Git, Inc. is expected to have EPS in the upcoming year of $8.9. The expected ROE is 12.2%. An appropriate required return on the stock is 14.8%. If the firm has a plowback ratio of 59%, what is the expected dividend in the upcoming year?
3. A preferred share of Xubuntu Corporation will pay a dividend of $7 in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 11.6% on this stock. Using the dividend discount model to calculate the intrinsic value, how much is this stock worth?
4. A company has an expected ROE of 16%. If it pays out 21% of its earnings as dividends, what will be its dividend growth rate?Enter answer in percents to two decimal places.
5. A firm is planning on paying its first dividend of $4.1 three years from today. After that, dividends are expected to grow at 3.2% per year indefinitely. The stock's required return is 12%. What is the intrinsic value of a share today?
6. Zombie Manufacturing Company is expected to pay a dividend of $4 in the upcoming year. Dividends are expected to grow at 7.1% per year. The risk-free rate of return is 2.1%, and the expected return on the market portfolio is 8.1%. Investors use the CAPM to compute the market capitalization rate and use the constant-growth dividend discount model to determine the value of the stock. The stock's current price is $87. What is your estimate for the market capitalization rate of this asset?Enter answer in percents to two decimal places.
7. Dungeons and Dragons Gaming Co. is expected to pay a dividend in year 1 of $1.2, a dividend in year 2 of $2.7, and a dividend in year 3 of $3.6. After year 3, dividends are expected to grow at the rate of 4.3% per year. An appropriate required return for the stock is 15%. Using the multistage dividend discount model, what should be the price of the stock today?