# HW6.docx - Question 1 1.5 out of 1.5 points Banana Company...

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Question 1 1.5 out of 1.5 points 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? Selected Answer: 75.0 0 Question 2 1.5 out of 1.5 points 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? Selected Answer: 20.4 2 Question 3 1.5 out of 1.5 points 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? Selected Answer: 13 % Question 4 1.5 out of 1.5 points 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? Selected Answer: 33.1 8 Question 5 1.5 out of 1.5 points Duane Lee Inc. will pay a dividend of \$5 each year for the next 10 years. Thereafter, it will pay no dividends. If you require 12 percent rate of return, how much is this stock worth to you? Selected Answer: 28.2 5 Question 6 1.5 out of 1.5 points Two companies, A and B, are in the same risk class. Company A pays a constant dividend of \$4 per year and is selling in the market for \$35 per

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share. Company B just paid a dividend of \$3.25 per share. If its dividends
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• Fall '15
• Yash R. Puri

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