Reference no: EM131402418
1. If D1 = $2.56 and P0 = $32.82, what is the dividend yield?
2. If D1 = $7.5, g (which is constant) = 5.8%, and P0 = $61.7, what is the required rate of return on the stock? That is, solve for r.
3. A stock just paid a dividend of D0 = $1. The required rate of return is rs = 17.6%, and the constant growth rate is g = 3.7%. What is the current stock price?
4. ABC just paid a dividend of D0 = $4.1. Analysts expect the company's dividend to grow by 31% this year, by 21% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this stock is 11%. What is the best estimate of the stock's current market value?
5. A stock is expected to pay a dividend of $1.6 at the end of the year. The required rate of return is rs = 18.3%, and the expected constant growth rate is g = 7.7%. What is the stock's current price?
6. ABC Company's last dividend was $0.8. The dividend growth rate is expected to be constant at 34% for 2 years, after which dividends are expected to grow at a rate of 5% forever. The firm's required return (rs) is 13%. What is its current stock price (i.e. solve for Po)?
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Required rate of return on the stock
: 1. If D1 = $2.56 and P0 = $32.82, what is the dividend yield? 2. If D1 = $7.5, g (which is constant) = 5.8%, and P0 = $61.7, what is the required rate of return on the stock? That is, solve for r.
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