Calculate the return if price of the stock at end of year

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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

Reference no: EM132006768

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