Reference no: EM132696003

1. P. Noel Company's common stock has just paid a $1.00 dividend. If investors believe that the expected rate of return on P. Noel is 9% and that dividends will grow at the rate of 3% per year for the foreseeable future, what is the value of a share of P. Noel stock?

2. Butler, Inc.'s return on equity is 12% and management retains 60% of earnings for investment purposes. Based on this information, what will be the firm's growth rate?

3. The GAP's most recent earnings per share were $3. Analysts forecast next year's earnings per share at $3.25. If the appropriate P/E ratio is 20, what is the value of GAP stock?

4. Home Depot stock is currently selling for $60 per share. Next year's dividend is expected to be $2; next year's earnings per share are expected to be $4.50. Calculate Home Depot's P/E ratio.

5. National Grit's preferred stock has a par value of $100, sells for $120 and pays $8 each year in dividends. What is the required rate of return?

6. Payday Loan Co. issued preferred stock that pays a $6 annual dividend. If the required return on the preferred stock is 8 percent, what is the maximum price an investor should pay for the preferred stock?