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1. As the beginning of the year, you purchased a share of stock for $35. Over the year the dividends paid on the stock were $2.75 per share.

A. Calculate the return if the price of the stock at the end of the year is $30

B. Calculate the return if the price of the stock at the end of the year is $40

2. WGM Inc. is a profitable company that is not paying a dividend on its common stock. James Weber, an analyst for A.G. Edwards believes that WGM will begin paying a $4.00 per share dividend in three years and that the dividend will increase 7% annually thereafter. James believes that the required return for WGM is 12%. According to James’ estimate, what is the current value of WGM’s common stock?

a. $63.78

b. $80.00

c. $71.43

d. $75.00

e. $40.00

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92844416

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