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summer_Quiz_2_answer_ - Chapter 8 Stock Valuation FIN 3715...

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Chapter 8 Stock Valuation FIN 3715 Quiz 2 Student Name _________________________ ________ 1.Bottle Top, Inc. recently announced they will pay their first annual dividend next year in the amount of \$0.75 a share. The dividend will be increased by 4 percent annually thereafter. How much are you willing to pay for one share of this stock if you require a 10 percent rate of return? a. \$12.50 b. \$13.83 c. \$21.58 d. \$22.91 ________ 2.The common stock of the Paper Co. is selling for \$41.40 a share and offers an 8.2 percent rate of return. The dividend growth rate is constant at 4 percent. What is the expected amount of the next dividend? a. \$1.67 b. \$1.74 c. \$1.81 d. \$1.90 ________ 3.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? a. 6.27 percent b. 7.27 percentc. 8.27 percentd. 9.27 percent ________ 4.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

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summer_Quiz_2_answer_ - Chapter 8 Stock Valuation FIN 3715...

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