Chapter 9 Homework

# Chapter 9 Homework - Chapter 9 Homework – Finance 302 9-2...

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Unformatted text preview: Chapter 9 Homework – Finance 302 9-2 CONSTANT GROWTH VALUATION: Thomas Brothers is expected to pay a \$0.50 share dividend at the end of the year (that is, D 1 = \$0.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on a stock, r S , is 15%. What is the stock’s current value per share? 9-3 CONSTANT GROWTH VALUATION: Harrison Clothier’s stock currently sells for \$20.00 a share. It just paid a dividend of \$1.00 a share (that is, D = \$.1.00). The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the required rate of return? 9-6 PREFERRED STOCK VALUATION: Fee Founders has perpetual preferred stock outstanding that sells for \$60 a share and pays a dividend of \$5 at the end of each year. What is the required rate of return? 9-7 PREFERRED STOCK RATE OF RETURN: What will be the nominal rate of return on a perpetual preferred stock with a \$100 par value, a stated dividend of 8% of par, and a current market price of (a) \$60, (b) \$80, (c) \$100, and (d) \$140? 9-8 PREFERRED STOCK VALUATION:...
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Chapter 9 Homework - Chapter 9 Homework – Finance 302 9-2...

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