Stock dividends problems | Business & Finance homework help

1.value:

10.00 points

Antiques R Us is a mature manufacturing firm. The company just paid a $15 dividend, but management expects to reduce the payout by 9 percent per year indefinitely.

 

Required :

If you require an 20 percent return on this stock, what will you pay for a share today?

 

 

$46.60

 

$47.54

 

$51.72

 

$124.09

 

$47.07

 

2.value:

10.00 points

Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.30 next year. The growth rate in dividends for all three companies is 5 percent. The required return for each company’s stock is 8.10 percent, 11.90 percent, and 15.10 percent, respectively.

 

(a)               What is the stock price for Red. Inc., Company?

(b)              What is the stock price for Yellow Corp. Company?

(c)               What is the stock price for Blue Company?

 

 

3.value:

10.00 points

Marcel Co. is growing quickly. Dividends are expected to grow at a 20 percent rate for the next 3 years, with the growth rate falling off to a constant 5 percent thereafter.

 

Required:

If the required return is 12 percent and the company just paid a $3.40 dividend. what is the current share price? (Do not round your intermediate calculations.)

 

       $74.46

       $70.27

       $75.94

       $67.73

       $72.97

 

4.value:

10.00 points

Far Side Corporation is expected to pay the following dividends over the next four years: $13, $11, $6, and $3. Afterward, the company pledges to maintain a constant 3 percent growth rate in dividends forever.

 

Required:

If the required return on the stock is 13 percent, what is the current share price? (Do not round your intermediate calculations.)

 

       $42.82

       $43.73

       $52.89

       $45.07

       $46.42

 

5.value:

10.00 points

Teder Corporation stock currently sells for $115 per share. The market requires a 9 percent return on the firm’s stock.

 

Required :

If the company maintains a constant 5 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?

 

       $6.56

       $4.21

       $4.38

       $4.60

       $16.15

 

6.value:

10.00 points

Thirsty Cactus Corp. just paid a dividend of $1.50 per share. The dividends are expected to grow at 35 percent for the next 9 years and then level off to a 7 percent growth rate indefinitely.

  

Required :

If the required return is 14 percent, what is the price of the stock today?

 

       $139.53

       $142.32

       $105.01

       $136.74

       $4.5

 

7.value:

10.00 points

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 14 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $6 per share dividend in 15 years and will increase the dividend by 3 percent per year thereafter.

 

Required:

If the required return on this stock is 8 percent, what is the current share price? (Do not round your intermediate calculations.)

 

       $42.90

       $42.08

       $40.86

       $37.83

       $38.81

 

8.value:

10.00 points

Suppose you know a company’s stock currently sells for $60 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield.

 

Required:

If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

 

       $3.00

       $3.05

       $2.71

       $2.86

       $5.71

 

9.value:

10.00 points

Apocalyptica Corp. pays a constant $13 dividend on its stock. The company will maintain this dividend for the next 13 years and will then cease paying dividends forever.

 

Required:

If the required return on this stock is 8 percent, what is the current share price?

 

       $100.69

       $107.89

       $102.75

       $169.00

       $110.97

 

10.value:

10.00 points

E-Eyes.com Bank just issued some new preferred stock. The issue will pay a $10 annual dividend in perpetuity, beginning 5 years from now.

 

Required :

If the market requires a 7 percent return on this investment, how much does a share of preferred stock cost today?

 

       $142.86

       $103.54

       $101.86

       $114.43

       $108.99

 

11.value:

10.00 points

The next dividend payment by Hot Wings, Inc., will be $4.95 per share. The dividends are anticipated to maintain a 5 percent growth rate forever.

 

Required:

If the stock currently sells for $58 per share, what is the required return?

 

       12.86%

       8.53%

       13.53%

       13.26%

       5.00%

 

 

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