56.
|
You are an accountant and have been analyzing the financial statements of Euro Place Markets, which is a foreign retailer. While the firm's financials are not prepared according to GAAP, you have still been able to understand the firm's accounting practices and feel that this firm has a bright future. On which one of the following U.S. markets, if any, might you be able to purchase shares in this firm?
Refer to section 8.3
|
AACSB: Analytic
Blooms: Apply Blooms: Understand Difficulty: 1 Easy Learning Objective: 08-03 The different ways corporate directors are elected to office. Section: 8.3 Topic: Pink Sheets |
57.
|
Miller Brothers Hardware paid an annual dividend of $0.95 per share last month. Today, the company announced that future dividends will be increasing by 2.6 percent annually. If you require a 13 percent rate of return, how much are you willing to pay to purchase one share of this stock today?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
58.
|
Sessler Manufacturers made two announcements concerning its common stock today. First, the company announced that the next annual dividend will be $1.75 a share. Secondly, all dividends after that will decrease by 1.5 percent annually. What is the maximum amount you should pay to purchase a share of this stock today if you require a 14 percent rate of return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Negative growth |
59.
|
How much are you willing to pay for one share of Jumbo Trout stock if the company just paid a $0.70 annual dividend, the dividends increase by 2.5 percent annually, and you require a 10 percent rate of return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
60.
|
Free Motion Enterprises paid a $2.20 per share annual dividend last week. Dividends are expected to increase by 3.75 percent annually. What is one share of this stock worth to you today if your required rate of return is 15 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
61.
|
Upper Crust Bakers just paid an annual dividend of $3.10 a share and is expected to increase that amount by 4 percent per year. If you are planning to buy 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 12 percent at the time of your purchase?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
62.
|
The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 12 percent annual return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Constant dividend |
63.
|
Show Boat Dinner Theatres has paid annual dividends of $0.32, $0.52, and $0.60 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has leveled off and sales are expected to remain relatively flat. Given the lack of future growth, you will only buy this stock if you can earn at least a 19 percent rate of return. What is the maximum amount you are willing to pay for one share of this stock today?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Constant dividend |
64.
|
The common stock of Auto Deliveries sells for $28.16 a share. The stock is expected to pay $1.35 per share next year when the annual dividend is distributed. The firm has established a pattern of increasing its dividends by 3 percent annually and expects to continue doing so. What is the market rate of return on this stock?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Required return |
65.
|
The current dividend yield on Clayton's Metals common stock is 3.2 percent. The company just paid a $1.48 annual dividend and announced plans to pay $1.54 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Required return |
66.
|
Northern Gas recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Required return |
67.
|
Denver Shoppes will pay an annual dividend of $1.46 a share next year with future dividends increasing by 4.2 percent annually. What is the market rate of return if the stock is currently selling for $42.10 a share?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Required return |
68.
|
Great Lakes Health Care common stock offers an expected total return of 9.2 percent. The last annual dividend was $2.10 a share. Dividends increase at a constant 2.6 percent per year. What is the dividend yield?
Dividend yield = 0.092 - 0.026 = 6.6 percent
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend yield |
69.
|
Electronics, Inc. common stock returned a nifty 23.5 percent rate of return last year. The dividend amount was $0.25 a share which equated to a dividend yield of 0.95 percent. What was the rate of price appreciation for the year?
g = 0.235 - 0.0095 = 22.55 percent
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Growth rate |
70.
|
Roy's Welding Supplies common stock sells for $38 a share and pays an annual dividend that increases by 3 percent annually. The market rate of return on this stock is 8.20 percent. What is the amount of the last dividend paid?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend amount |
71.
|
Douglass Gardens pays an annual dividend that is expected to increase by 3.6 percent per year. The stock commands a market rate of return of 12.6 percent and sells for $28.50 a share. What is the expected amount of the next dividend?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend amount |
72.
|
Atlas Mines has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 2.75 percent annually. The firm just paid an annual dividend of $1.67. What will the dividend be six years from now?
D6 = $1.67 × (1.0275)6 = $1.97
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend amount |
73.
|
A stock pays a constant annual dividend and sells for $56.10 a share. If the market rate of return on this stock is 12.5 percent, what is the amount of the next annual dividend?
D0 = 0.122 × $56.10 = $6.84
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend amount |
74.
|
You want to purchase some shares of Green World stock but need a 15 percent rate of return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock if the company pays a constant $0.90 annual dividend per share?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Constant dividend |
75.
|
Home Canning Products common stock sells for $41.00 a share and has a market rate of return of 12.8 percent. The company just paid an annual dividend of $1.15 per share. What is the dividend growth rate?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend growth rate |
76.
|
Winter Time Adventures is going to pay an annual dividend of $2.86 a share on its common stock next year. This year, the company paid a dividend of $2.75 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth five years from now if the applicable discount rate is 11.7 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Future stock price |
77.
|
Hightower Pharmacy just paid a $3.10 annual dividend. The company has a policy of increasing the dividend by 4.2 percent annually. You would like to purchase 100 shares of stock in this firm but realize that you will not have the funds to do so for another four years. If you require a 16 percent rate of return, how much will you be willing to pay per share for the 100 shares when you can afford to make this investment?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Future stock price |
78.
|
National Warehousing just announced it is increasing its annual dividend to $1.18 next year and establishing a policy whereby the dividend will increase by 3.25 percent annually thereafter. How much will one share of this stock be worth 8 years from now if the required rate of return is 9.5 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Future stock price |
79.
|
Shares of Hot Donuts common stock are currently selling for $32.35. The last annual dividend paid was $1.25 per share and the market rate of return is 10.7 percent. At what rate is the dividend growing?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend growth rate |
80.
|
Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15 percent a year for the next 4 years and then decreasing the growth rate to 3.5 percent per year. The company just paid its annual dividend in the amount of $0.20 per share. What is the current value of one share of this stock if the required rate of return is 15.5 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Two-stage growth |
81.
|
KL Airlines paid an annual dividend of $1.18 a share last month. The company is planning on paying $1.50, $1.75, and $1.80 a share over the next 3 years, respectively. After that, the dividend will be constant at $1.50 per share per year. What is the market price of this stock if the market rate of return is 10.5 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
82.
|
Renew It, Inc., is preparing to pay its first dividend. It is going to pay $0.45, $0.60, and $1 a share over the next three years, respectively. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you per share if you demand a 10.8 percent rate of return on stocks of this type?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
83.
|
Diets For You announced today that it will begin paying annual dividends next year. The first dividend will be $0.12 a share. The following dividends will be $0.15, $0.20, $0.50, and $0.75 a share annually for the following 4 years, respectively. After that, dividends are projected to increase by 4 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 8.5 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
84.
|
Crystal Glass recently paid $3.60 as an annual dividend. Future dividends are projected at $3.80, $4.10, and $4.25 over the next 3 years, respectively. Beginning 4 years from now, the dividend is expected to increase by 3.25 percent annually. What is one share of this stock worth to you if you require a 12.5 percent rate of return on similar investments?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
85.
|
Langley Enterprises pays a constant dividend of $0.85 a share. The company announced today that it will continue to pay the dividend for another 2 years after which time all dividends will cease. What is one share of this stock worth today if the required rate of return is 16.5 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
86.
|
Yesteryear Productions pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of $0.40 a share for two years commencing four years from today. After that time, the company plans on paying a constant $0.75 a share annual dividend indefinitely. How much are you willing to pay to buy a share of this stock today if your required return is 11.6 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
87.
|
Sweatshirts Unlimited is downsizing. The company paid a $2.80 annual dividend last year. The company has announced plans to lower the dividend by 25 percent each year. Once the dividend amount becomes zero, the company will cease all dividends and go out of business. You have a required rate of return of 18 percent on this particular stock given the company's situation. What are your shares in this firm worth today on a per share basis?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Negative growth |
88.
|
Dexter Metals, paid its first annual dividend yesterday in the amount of $0.18 a share. The company plans to double each annual dividend payment for the next 3 years. After that time, it plans to pay $1.25 a share for 2 years than then pay a constant dividend of $1.60 per share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 10.24 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant growth |
89.
|
Marshall Arts Studios just paid an annual dividend of $1.36 a share. The firm plans to pay annual dividends of $1.50, $1.55, and $1.58 over the next 3 years, respectively. After that time, the dividends will be held constant at $1.70 per share. What is this stock worth today at a 9 percent discount rate?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
90.
|
Home Care Providers is paying an annual dividend of $1.10 every other year. The last dividend was paid two years ago. The firm will continue this policy until 3 more dividend payments have been paid. One year after the last dividend normal payment, the company plans to pay a final liquidating dividend of $40 per share. What is the current market value of this stock if the required return is 17 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
91.
|
Last year, Hansen Delivery paid an annual dividend of $3.20 per share. The company has been reducing the dividends by 10 percent annually. How much are you willing to pay to purchase stock in this company if your required rate of return is 13 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Negative growth |
92.
|
Beatrice Markets is expecting a period of intense growth and has decided to retain more of its earnings to help finance that growth. As a result, it is going to reduce its annual dividend by 30 percent a year for the next 2 years. After that, it will maintain a constant dividend of $2.50 a share. Last year, the company paid $3.60 as the annual dividend per share. What is the market value of this stock if the required rate of return is 14.5 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
93.
|
Bonnie's Ice Cream is expecting its ice cream sales to decline due to the increased interest in healthy eating. Thus, the company has announced that it will be reducing its annual dividend by 2 percent a year for the next five years. After that, it will maintain a constant dividend of $2 a share. Last year, the company paid $2.35 per share. What is this stock worth to you if you require a 9.5 percent rate of return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Nonconstant dividends |
94.
|
J&J Foods wants to issue some 7 percent preferred stock that has a stated liquidating value of $100 a share. The company has determined that stocks with similar characteristics provide a 12.8 percent rate of return. What should the offer price be?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Preferred stock |
95.
|
The preferred stock of Rail Lines, Inc., pays an annual dividend of $12.25 and sells for $59.70 a share. What is the rate of return on this security?
R = $12.25/$59.70 = 20.52 percent
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Preferred stock |
96.
|
Marie owns shares of Deltona Productions preferred stock which she says provides her with a constant 14.3 percent rate of return. The stock is currently priced at $45.45 a share. What is the amount of the dividend per share?
D = 0.143 × $45.45 = $6.50
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Preferred stock |
97.
|
Zylo, Inc. preferred stock pays a $7.50 annual dividend. What is the maximum price you are willing to pay for one share of this stock today if your required return is 7.5 percent?
P0 = $7.50/0.075 = $100.00
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Preferred stock |
98.
|
Jefferson Mills just paid a dividend of $1.56 per share on its stock. The dividends are expected to grow at a constant rate of 8 percent per year, indefinitely. What will the price of this stock be in 7 years if investors require a 15 percent rate of return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy EOC: 8-1 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
99.
|
The next dividend payment by Hillside Markets will be $2.35 per share. The dividends are anticipated to maintain a 4.5 percent growth rate forever. The stock currently sells for $65 per share. What is the dividend yield?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy EOC: 8-3 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend yield |
100.
|
The Stiller Corporation will pay a $3.80 per share dividend next year. The company pledges to increase its dividend by 2.4 percent indefinitely. How much are you willing to pay to purchase this company's stock today if you require a 6.9 percent return on your investment?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy EOC: 8-4 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
101.
|
Suppose you know a company's stock currently sells for $85 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. What is the current dividend if it's the company's policy to always maintain a constant growth rate in its dividends?
Dividend yield = 0.10/2 = 0.05
D1 = 0.05 × $85 = $4.25 D0 = $4.25/1.05 = $4.05 |
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy EOC: 8-6 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Current dividend |
102.
|
Whistle Stop Trains pays a constant $16 dividend on its stock. The company will maintain this dividend for the next 14 years and will then cease paying dividends forever. What is the current price per share if the required return on this stock is 15 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy EOC: 8-7 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
103.
|
Morristown Industries has an issue of preferred stock outstanding that pays a $12.60 dividend every year in perpetuity. What is the required return if this issue currently sells for $80 per share?
R = $12.60/$80 = 15.75 percent
|
AACSB: Analytic
Blooms: Apply Difficulty: 1 Easy EOC: 8-8 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Required return |
104.
|
The Farmer's Market just paid an annual dividend of $5 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a 13 percent return on the stock for the first 3 years, a 9 percent return for the next 3 years, a 7 percent return thereafter. What is the current price per share?
|
AACSB: Analytic
Blooms: Apply Difficulty: 3 Hard EOC: 8-10 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
105.
|
Springboro Tech is a young start-up company. No dividends will be paid on the stock over the next 15 years, because the firm needs to plow back its earnings to fuel growth. The company will pay a $15 per share dividend in 16 years and will increase the dividend by 4 percent per year thereafter. What is the current share price if the required return on this stock is 8 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-11 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
106.
|
Galloway, Inc. has an odd dividend policy. The company has just paid a dividend of $7 per share and has announced that it will increase the dividend by $2 per share for each of the next 5 years, and then never pay another dividend. How much are you willing to pay per share today to buy this stock if you require a 15 percent return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-12 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
107.
|
Jen's Fashions is growing quickly. Dividends are expected to grow at a 19 percent rate for the next 3 years, with the growth rate falling off to a constant 8 percent thereafter. The required return is 12 percent and the company just paid a $3.80 annual dividend. What is the current share price?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-14 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
108.
|
Hardwoods, Inc. is a mature manufacturing firm. The company just paid a $10 dividend, but management expects to reduce the payout by 9 percent each year, indefinitely. How much are you willing to pay today per share to buy this stock if you require a 15 percent rate of return?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
109.
|
Bechtel Machinery stock currently sells for $65 per share. The market requires a 14 percent return on the firm's stock. The company maintains a constant 8 percent growth rate in dividends. What was the most recent annual dividend per share paid on this stock?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-17 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Current dividend |
110.
|
Southern Utilities just issued some new preferred stock. The issue will pay a $19 annual dividend in perpetuity beginning 9 years from now. What is one share of this stock worth today if the market requires a 7 percent return on this investment?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-18 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
111.
|
Big Falls Tours just paid a dividend of $1.55 per share. The dividends are expected to grow at 30 percent for the next 8 years and then level off to a 6 percent growth rate indefinitely. What is the price of this stock today given a required return of 15 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-20 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
112.
|
Harvey County Choppers, Inc. is experiencing rapid growth. The company expects dividends to grow at 25 percent per year for the next 7 years before leveling off to 7 percent into perpetuity. The required return on the stock is 12 percent. What is the current stock price if the annual dividend share that was just paid was $1.05?
|
AACSB: Analytic
Blooms: Apply Difficulty: 2 Medium EOC: 8-21 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
113.
|
Westover Winds just paid a dividend of $2.10 per share. The company will increase its dividend by 8 percent next year and will then reduce its dividend growth rate by 2 percentage points per year until it reaches the industry average of 2 percent dividend growth, after which the company will keep a constant growth rate forever. What is the price of this stock today given a required return of 11 percent?
|
AACSB: Analytic
Blooms: Apply Difficulty: 3 Hard EOC: 8-24 Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Stock price |
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