summer_Quiz_2_answer_

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
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This note was uploaded on 07/17/2008 for the course FIN 3715 taught by Professor Stephens during the Summer '08 term at LSU.

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summer_Quiz_2_answer_ - Chapter 8 Stock Valuation FIN 3715...

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