Percent rate of return on similar investments

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1. Bunky's Eats recently paid $1.65 as an annual dividend. Future dividends are projected at $1.68, $1.72, $1.76, and $1.80 over the next four years, respectively. In year 5, the dividend is expected to increase by 2.5 percent annually. What is one share of this stock worth to you if you require an 11 percent rate of return on similar investments?

2. Bug Buster just paid its annual dividend of $1.25 a share. The firm recently announced that all future dividends would be increased by 3 percent annually. What is one share of this stock worth to you if you require an 11 percent rate of return?

3. Hope Company's stock sells for $22 per share, its last dividend was $1.00, an its growth rate is a constant 8%. What is its required rate of return?

Reference no: EM13336201

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