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**Unformatted text preview: **The answers are marked in Bold 1. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 12.5%, and the expected constant growth rate is g = 8.5%. What is the current stock price? a. $17.82 b. $18.28 c. $18.75 d. $19.22 e. $19.70 2. If D1 = $1.50, g (which is constant) = 6.5%, and P0 = $56, what is the stocks expected capital gains yield for the coming year? a.6.50% b. 6.83% c. 7.17% d. 7.52% e. 7.90% 3. McDonnell Manufacturing is expected to pay a dividend of $1.50 per share at the end of the year (D1 = $1.50). The stock sells for $34.50 per share, and its required rate of return is 11.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate? a. 6.46% b. 6.63% c. 6.80% d. 6.97% e. 7.15% 4. The Zumwalt Company is expected to pay a dividend of $2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock 5....

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