Homework 6.docx - QUESTION 1 1. Banana Company just paid a...

QUESTION 1
1. Banana Company just paid a dividend of $5 per share. If dividends have a growth rate of 5
percent and you require 12 percent return, what is the value of the stock?
71.42
96.42
41.67
75.00
105.00
43.75
2 points
QUESTION 2
1. Slow decline Company just paid a dividend of $2.50 per share. If dividends have been
declining at a constant rate of 2 percent and you require 10 percent return, what is the value
of the stock?
2 points
QUESTION 3
1. If the dividend yield on Weildone, Inc. common stock is 8 percent and its expected constant
growth rate is 5percent, what is the required rate of return?
2 points
QUESTION 4
1. Dolce, Deluca, and Benz Inc. will pay a dividend of $6 for each of the next 3 years, $7 for each
of the years 4-7, and $9 for the years 8-10. Thereafter, the company will pay no dividends. If
you require 16 percent rate of return on investments in this risk class, how much is this stock
worth to you?