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1. The common stock of ABC Industries is valued at $39.4 a share. The company increases their dividend by 4.3 percent annually and expects their next dividend to be $0.3. What is the required rate of return on this stock? That is, solve for r.
2. ABC Enterprises’ stock is currently selling for $79.1 per share. The dividend is projected to increase at a constant rate of 3.8% per year. The required rate of return on the stock is 12%. What is the stock’s expected price 5 years from today (i.e. solve for P5)?
3. If D0 = $4, g = 5.3%, and P0 = $78.1, what is the required rate of return on the stock? That is, solve for r.
4. ABC’s last dividend paid was $1, its required return is 14.6%, its growth rate is 4.4%, and its growth rate is expected to be constant in the future. What is Sorenson’s expected stock price in 7 years, i.e., what is P7?
5. A stock just paid a dividend of D0 = $0.8. The required rate of return is rs = 13.4%, and the constant growth rate is g = 5.8%. What is the current stock price?
6. ABC is expected to pay a dividend of $5.7 per share at the end of the year. The stock sells for $150 per share, and its required rate of return is 10.7%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?
7. If D1 = $3.26 and P0 = $122.43, what is the dividend yield?
8. ABC Enterprises’ stock is expected to pay a dividend of $2.6 per share. The dividend is projected to increase at a constant rate of 3.6% per year. The required rate of return on the stock is 16.9%. What is the stock’s expected price 3 years from today (i.e. solve for P3)?
9. ABC Inc., is expected to pay an annual dividend of $4.8 per share next year. The required return is 15.8 percent and the growth rate is 8.6 percent. What is the expected value of this stock five years from now?
10. A stock is expected to pay a dividend of $1.5 at the end of the year. The required rate of return is rs = 9.1%, and the expected constant growth rate is g = 7.5%. What is the stock’s current price?
11. ABC just paid a dividend of D0 = $4.3. Analysts expect the company’s dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 14%. What is the best estimate of the stock’s current market value?
12. The common stock of Wetmore Industries is valued at $40.8 a share. The company increases their dividend by 3 percent annually and expects their next dividend to be $5.9. What is the required rate of return on this stock? That is, solve for r.
13. ABC’s last dividend was $0.3. The dividend growth rate is expected to be constant at 34% for 3 years, after which dividends are expected to grow at a rate of 7% forever. If the firm’s required return (rs) is 16%, what is its current stock price (i.e. solve for Po)?
14. ABC Company’s last dividend was $2.4. The dividend growth rate is expected to be constant at 27% for 2 years, after which dividends are expected to grow at a rate of 7% forever. The firm’s required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?
15. If D1 = $4.4, g (which is constant) = 5.9%, and P0 = $75.7, what is the required rate of return on the stock? That is, solve for r.
16. ABC’s stock has a required rate of return of 13.7%, and it sells for $53 per share. The dividend is expected to grow at a constant rate of 6.9% per year. What is the expected year-end dividend, D1?
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