You should be willing to pay for share of this stock today

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Reference no: EM131346581

1. A stock is expected to pay the following dividends per share over the next four years, respectively: $0.00, $2.30, 2.60, and $2.90. If you expect to be able to sell the stock for $95.83 in four years and your required rate of return is 6%, what is the most that you should be willing to pay for a share of this stock today?

A. $103.63

B. $7.80

C.$82.43

D. $109.38

2. Temple Lunch Trucks, Inc. just paid a dividend of $2.00. Dividends are expected to grow at a rate of 3% per year from here on out. If the risk-free rate is 2%, the MRP is 8%, and Temple Lunch Trucks’ stock is only 40% as risky as the market, what is the most that you should be willing to pay for a share of this stock today?

A. $147.14

B. $142.86

C. $90.91

D. $93.64

Reference no: EM131346581

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