1. Investors require a return of 12.5% per year to hold a stock. The stock’s next dividend is expected to be $1.58 per share and the dividends are expected to grow forever at a constant rate of 4.8% per year. What is the stock’s intrinsic value per share?

1) $20.52

2) $19.37

3) $18.67

4) $17.62

5) $21.50

2. A company’s stock price currently is $86.31 per share. If the company’s dividend yield is 7.1% per year and the dividends are expected to grow forever at a constant rate of 5.1% per year, what is the stock’s annual required return?

1) 12.2%

2) 10.5%

3) 12.8%

4) 11.7%

5) 13.3%