How much is he willing to pay for this stock

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Reference no: EM131981183

1. You purchased shares of stock one year ago at a price of $62.92 per share. During the year, you received dividend payments of $1.87 and sold the stock for $70.04 per share. If the inflation rate during the year was 2.27 percent, what was your real return?

14.32%

8.85%

16.88%

11.75%

10.59%

2. Tim is considering the purchase of a common stock that will not pay any dividend for next 3 years. The first dividend will be $2 in the end of year 4. He expects this stock to have a constant growth rate of 8 percent since then. If he requires a 12 percent rate of return, how much is he willing to pay for this stock?

A) 34.55

B) 35.59

C) 37.42

D) 39.28

Reference no: EM131981183

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