Reference no: EM133045871

Questions -

Q1. Ferris Farms Ltd intends to pay a dividend of $4.00 at the end of the year. The dividend is then expected to grow at 25% for one year, at 20% for one year and then settle down to a long run growth rate of 4%. If investors require a return of 14% to hold the stock, what price should the stock sell for?

-$57.52

-$55.52

-$53.52

-$56.52

Q2. Farris Farms Ltd does not intend to pay any dividends for the next four years. At the end of Year 4, they intend to pay a $1.00 dividend. If the dividend then grows at 2% per year and investors require a 12% return to hold the stock, what price should the stock sell for?

-$8.52

-$6.36

-$7.12

-$2.47