Stock with constant dividend growth rate

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Reference no: EM132003234

1. A stock with a constant dividend growth rate of 5% is expected to make a $2 dividend in one year. If you require a 12% return on your investment, which of the following statements is INCORRECT?

A. The current stock price is $28.57.

B. The dividend yield is 7%.

C. The capital gains yield is 12%.

D. The stock price will grow at an annual 5%.

2. If Mary currently has $250,000 in her 401(k) plan earning 8%, how much will this be worth in 10 years when she retires if she continues to contribute $8,000 per year at the end of each year?

$743,522

$701,319

$655,624

$539,731

Reference no: EM132003234

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