What will you pay for share today

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1. Bruins R Us is a mature toy manufacturing firm. The company just paid a dividend of $9.53, but management expects to reduce the payout by 5% per year, indefinitely. If you require a 13 percent return on this stock, what will you pay for a share today?

a. 61.64

b. 125.08

c. 113.17

d. 50.30

e. 55.59

2. XYZ company has just paid a dividend of $8.89 per share. The dividend is expected to grow at a rate of 16 percent annually. If the current ex-dividend stock price of XYZ is $96.33, what is the required rate of return?

a. 10.7 percent

b. 26.7 percent

c. 64.5 percent

d. 25.2 percent

Reference no: EM132000797

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