# HW4b.docx - Question 10 The nominal rate of return on the...

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Question 10 The nominal rate of return on the bonds of Steve's Boats is 8.75%. The real rate of return is 3.4%. What is the rate of inflation? Selected Answer: 5.17% Question 11 Doctors-On-Call, a newly formed medical group, just paid a dividend of \$.50. The company's dividend is expected to grow at a 20% rate for the next 5 years and at a 3% rate thereafter. What is the value of the stock if the appropriate discount rate is 12%? Selected Answer: \$11.17 Question 12 The Double Dip Co. is expecting its ice cream sales to decline due to the increased interest in healthy eating. Thus, the company has announced that it will be reducing its annual dividend by 5% a year for the next two years. After that, it will maintain a constant dividend of \$1 a share. Two weeks ago, the company paid a dividend of \$1.40 per share. What is this stock worth if you require a 9% rate of return? Selected Answer: \$11.64 Question 13 The common stock of Grady Co. had an 11.25% rate of return last year. The dividend amount was \$.70 a share which equated to a dividend yield of 1.5%. What was the rate of

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• Summer '19
• Dividend, value of the stock

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