## FINANCE-ABC Company’s last dividend was $4.3.The dividend growth rate

## FINANCE-ABC Company’s last dividend was $4.3.The dividend growth rate

QUESTION 1 Show Work

in Excel

1.

ABC Company’s last dividend was $4.3.The dividend growth rate is expected to be constant at 30% for 2

years, after which dividends are expected to grow at a rate of 7% forever.The firm’s required return (rs) is 13%. What is its current stock price

(i.e. solve for Po)?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 2

1.

ABC Enterprises’ stock is currently selling for $54 per

share.The dividend is projected to increase at a constant rate of 3.1%

per year.The required rate of return on thestockis 12%.What

is the stock’s expected price 5 years from today (i.e. solve for P5)?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 3

1.

The common stock of ABC Industries is valued at $88.6 a share. The

company increases their dividend by 12.9 percent annually and expects

their next dividend to be $4.7. What is the required rate of return on this

stock? That is, solve for r.

Note: Enter your answer rounded off to two decimal points.

Do not enter % in the answer box. For example, if your answer is 0.12345

then enter as 12.35 in the answer box.

1 points

QUESTION 4

1.

ABC is expected to pay a dividend of $5.5 per share at the

end of the year. The stock sells for $64 per share, and its required rate of return is

18.5%. The dividend is expected to grow at some constant rate, g,

forever. What is the growth rate (i.e. solve for g)?

Note:

Enter your answer rounded off to two decimal points. Do not enter % in the

answer box. For example, if your answer is 0.12345 then enter as 12.35 in

the answer box.

1 points

QUESTION 5

1.

A stock isexpectedto pay a dividend of $1.6 at the end of the

year. The required rate of return is rs= 9.6%, and the expected

constant growth rate is g = 7.7%. What is the stock’s current price?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 6

1.

If D0= $4.7,

g = 7.8%, and P0=

$67.9, what is the required rate of return on the stock? That is, solve for r.

Note:

Enter your answer rounded off to two decimal points. Do not enter % in the

answer box. For example, if your answer is 0.12345 then enter as 12.35 in

the answer box.

1 points

QUESTION 7

1.

ABCâs last dividend paid was

$1, its required return is 14.6%, its growth rate is 4.4%, and

its growth rate is expected to be constant in the future. What is

Sorenson’s expected stock price in 7 years, i.e., what is P7?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 8

1.

ABC’s last dividend was $1.8.The

dividend growth rate is expected to be constant at 26% for 3 years, after which

dividends are expected to grow at a rate of 5% forever.If the firm’s required return (rs)

is 15%, what is its current stock price (i.e. solve for Po)?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 9

1.

If D1=

$2, g (which isconstant) = 2.4%, and P0= $70.4, what is the required rate of return on the stock? That

is, solve for r.

Note:

Enter your answer rounded off to two decimal points. Do not enter % in the

answer box. For example, if your answer is 0.12345 then enter as 12.35 in

the answer box.

1 points

QUESTION 10

1.

A stock just paid a dividend of D0 = $0.5. The required rate

of return is rs = 14.3%, and the constant

growth rate is g = 5.1%. What is the current stock price?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 11

1.

ABC’s stock has a required rate of return of 12.8%, and it sells

for $60 per share.The dividend is expected to grow at a constant rate of 8.4% per

year.What is the expected year-end dividend, D1?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 12

1.

If D1=

$2.49 and P0=

$111.11, what is the dividend yield?

Note:

Enter your answer rounded off to two decimal points. Do not enter % in the

answer box. For example, if your answer is 0.12345 then enter as 12.35 in

the answer box.

1 points

QUESTION 13

1.

ABC just paid a dividend of D0= $4.Analysts expect the company’s dividend to grow by 33% this year,

by 28% in Year 2, and at a constant rate of 6% in Year 3 and thereafter.The required return on this stock is 17%.What is the best estimate of the stockâs current market value?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 14

1.

The common stock of Wetmore Industries is valued at $44.1 a share.

The company increases their dividend by 3.5 percent annually and expects

their next dividend to be $1.4. What is the required rate of return on this

stock? That is, solve for r.

Do not enter % in the answer box. For example, if your answer is 0.12345

then enter as 12.35 in the answer box.

1 points

QUESTION 15

1.

ABC Inc., is expected to pay an annual dividend of $3.7 per

share next year. The required return is 16.4 percent and the growth rate

is 3.5 percent. What is the expected value of this stock five years from

now?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

1 points

QUESTION 16

1.

ABC Enterprises’ stock is expected to pay a dividend

of $1.2 per share.The

dividend is projected to increase at a constant rate of 4% per year.The required rate of return on thestockis 14.4%.What

is the stock’s expected price 3 years from today (i.e. solve for P3)?

Note:

Enter your answer rounded off to two decimal points. Do not enter $ or comma in

the answer box. For example, if your answer is $12.345 then enter as 12.35

in the answer box.

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