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optionals - Chap 8

# optionals - Chap 8 - 8 1 You would like to earn a 9.5...

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8 ________ 1. You would like to earn a 9.5 percent rate of return on a 9 percent preferred stock. How much are you willing to pay for 10 shares? a. \$94.74 b. \$105.56 c. \$947.37 d. \$1,055.56 ________ 2. The common stock of Andy’s Sporting Goods sells for \$25.40 a share. The company recently paid their annual dividend of \$1.30 per share and expects to increase this dividend by 3 percent annually. What is the rate of return on this stock? ________ 3. The Black & Gold Co. is expected to pay a \$2.50 annual dividend next year. The market rate of return on this security is 12 percent and the market price is \$31.40 a share. What is the expected growth rate of Black & Gold? ________ 4. Battles, Inc. just paid an annual dividend of \$1.20 a share. The dividend will increase by 3 percent for the next three years and then increase by 2 percent annually thereafter. What is the present value of this stock at a discount rate of 9 percent? ________

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optionals - Chap 8 - 8 1 You would like to earn a 9.5...

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