How much are you willing to pay to purchase one share

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Q1. Three Corners Markets is expected to pay an annual dividend of $1.37 per share next year. After that, the future dividends will be increasing by 3.8 percent annually. If you require a return of 11.6 percent, how much are you willing to pay to purchase one share of this stock today?

a. 17.56

b. 15.57

c. 16

d. 18.23

Q2. Islander Inc. is a new firm in a rapidly growing industry. The company would be paying $2.50 in dividend next year. After that the company intends to grow the dividend at a 5% rate annually over a long period. You plan to buy the stock now and expect to sell it for $48.23 three years from now. What price must you pay now if your required rate of return is 12%?

a. 40.62

b. 42.93

c. 35.71

d. 125

Reference no: EM132848567

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