Future dividends are expected to grow at rate

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1. Railway Cabooses just paid its annual dividend of $4 per share. The company has been reducing the dividends by 10 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 14 percent?

2. MMK Cos. normally pays an annual dividend. The last such dividend paid was $1.85, all future dividends are expected to grow at a rate of 8 percent per year, and the firm faces a required rate of return on equity of 14 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $24.60 per round intermediate calculations and round your final answer to 2 decimal places.) Stock price.

Reference no: EM131938868

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