Compute today price of the stock

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1. Suppose the company just paid dividend of \$1. The dividends are expected to grow at 20% in Year 1 and 15% in Year 2. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

2. Suppose the company just paid dividend of \$1. The dividends are expected to grow at 25% in Year 1 and 20% in Year 2, and 15% in Year 3. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

3. Suppose the company will not pay any dividends in Years 1 and 2. Suppose that the company pays dividend of \$1 in Year 3 and after that the dividends will grow at 20% for the next two years. After that the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

4. ABC Company's last dividend was \$3.7.  The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 6% forever.  The firm's required return (rs) is 12%.  What is its current stock price (i.e. solve for Po)?

5. A stock just paid a dividend of D0 = \$1.5.  The required rate of return is rs = 18.6%, and the constant growth rate is g = 4.6%.  What is the current stock price?

6. The common stock of ABC Industries is valued at \$31.2 a share. The company increases their dividend by 11 percent annually and expects their next dividend to be \$1.6. What is the required rate of return on this stock? That is, solve for r.

7. If D1 = \$2, g (which is constant) = 2.4%, and P0 = \$70.4, what is the required rate of return on the stock? That is, solve for r.

8. If D0 = \$2.8, g = 3.2%, and P0 = \$79.4, what is the required rate of return on the stock? That is, solve for r.

9. ABC just paid a dividend of D0 = \$4.3.  Analysts expect the company's dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 7% in Year 3 and thereafter.  The required return on this stock is 14%.  What is the best estimate of the stock's current market value?

10. ABC is expected to pay a dividend of \$3.2 per share at the end of the year.  The stock sells for \$117 per share, and its required rate of return is 18.6%. The dividend is expected to grow at some constant rate, g, forever.  What is the growth rate (i.e. solve for g)?

11. ABC's last dividend was \$3.4.  The dividend growth rate is expected to be constant at 27% for 3 years, after which dividends are expected to grow at a rate of 7% forever. If the firm's required return (rs) is 16%, what is its current stock price (i.e. solve for Po)?

12. ABC's stock has a required rate of return of 14.7%, and it sells for \$28 per share.  The dividend is expected to grow at a constant rate of 7.2% per year.  What is the expected year-end dividend, D1?

13. ABC's last dividend paid was \$1.4, its required return is 18.7%, its growth rate is 3.3%, 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?

14. ABC Enterprises' stock is currently selling for \$68.4 per share.  The dividend is projected to increase at a constant rate of 5.8% per year.  The required rate of return on the stock is 12%.  What is the stock's expected price 5 years from today (i.e. solve for P5)?

15. The common stock of Wetmore Industries is valued at \$54 a share. The company increases their dividend by 5.8 percent annually and expects their next dividend to be \$4.5. What is the required rate of return on this stock? That is, solve for r.

16. ABC Enterprises' stock is expected to pay a dividend of \$1.9 per share.  The dividend is projected to increase at a constant rate of 5.2% per year.  The required rate of return on the stock is 17.6%.  What is the stock's expected price 3 years from today (i.e. solve for P3)?

17. ABC Inc., is expected to pay an annual dividend of \$0.3 per share next year. The required return is 12.7 percent and the growth rate is 6 percent. What is the expected value of this stock five years from now?

18. If D1 = \$4.35 and P0 = \$63.37, what is the dividend yield?

19. A stock is expected to pay a dividend of \$1.6 at the end of the year.  The required rate of return is rs = 12.5%, and the expected constant growth rate is g = 6.9%.  What is the stock's current price?

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