problem1. You purchase a stock for which you expect to receive the annual dividend of $2.10 for the fifteen years that you plan on holding it. After 15 years, you expect to sell the stock for 32.25. What is present value of a share for this company if you want a 10% return?_______
A) $31.41
B) $7.72
C) $23.69
D) $15.97
problem2. The Belgium Bike Company just paid an annual dividend of $1.12. If you anticipate a stable growth rate of four percent and have a required rate of return of 13%, what is the current stock price according to the stable growth dividend model? _______
A) $12.44
B) $13.46
C) $12.94
D) There is not enough information to answer this problem.
problem3. In a stream of past dividends, the initial dividend is $0.75 and the most recent dividend is $1.25. The number of years between these two dividends (n) is eight years. What is the average growth rate throughout this eight-year period? _______
A) 6.59%
B) 6.69%
C) 6.72%
D) 6.62%
problem4. Boyer Corp. has outstanding borrowings. One of these borrowings is nonconvertible preferred stock (cumulative) with a par value of $75 and the annual dividend rate of 8.25%. This preferred stock is currently selling for $56.46 per share. What is yield or return (r) on this preferred stock? _______
A) 10.432%
B) 10.959%
C) 10.395%
D) 10.623%