Communications is new firm in rapidly growing industry

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Reference no: EM131878168

1. Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 21 percent a year for the next 4 years and then decreasing the growth rate to 6 percent per year. The company just paid its annual dividend in the amount of $1.20 per share. What is the current value of one share of this stock if the required rate of return is 9.50 percent?

$59.50

$65.18

$52.25

$60.39

$56.20

2. Miller Brothers Hardware paid an annual dividend of $1.45 per share last month. Today, the company announced that future dividends will be increasing by 2.80 percent annually. If you require a 8.8 percent rate of return, how much are you willing to pay to purchase one share of this stock today?

$51.79

$23.39

$26.29

$53.24

$24.84

Reference no: EM131878168

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