Ch. 7 Practice

Ch. 7 Practice - dividend of $3.05, what is the current...

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FIN 3100 Chapter 7 Practice Dr. Lucy Ackert 1. Fashion Forward is a young start-up company. No dividends will be paid on the stock over the next 6 years because the company needs to plow back earnings to fuel growth. The company then plans to pay a $9 per share dividend in year 7 and will increase the dividend by 5 percent per year, thereafter. If the required return on the stock is 13 percent, what is the current share price? 2. Violin Masters is growing quickly. Dividends are expected to grow at 20 percent for the next three years, with the growth rate falling to a constant 6 percent thereafter. If the required return is 13 percent and the company just paid a
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Unformatted text preview: dividend of $3.05, what is the current share price? 3. Matza Inc.s stock currently sells at $72 per share. The market requires a return of 11 percent on the stock. If the company maintains a constant 6.5 percent growth rate in dividends, what was the most recent dividend per share on the stock? 4. The next dividend payment by Wentworth Corporation will be $1.90 per share. The dividends are expected to maintain a growth rate of 5.5% indefinitely. If the stock currently sells at $47.00 per share, what is the required return?...
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