1.Given the following information, what is the stock price of Firm X?
2.
If a firm does not pay a dividend, the constant growth model can still be
used as long as __________.
this model cannot be used without a dividend
3. Given the following information, compute the expected return on Firm X:
●
Dividend for the next period: $1.23
●
Current stock price: $22.50
●
Growth rate: 4.75%
$10.22
4. Given a growth rate of 4%, a dividend that is forecasted to be $1.50 next year, and an expected return of 11%, what is the numerator of the constant growth model? $1.50
5. Given the following information, what is the cost of equity for the constant growth model?
6. Given a growth rate of 5%, a current dividend of $1.50, and an expected return of 12%, what is the numerator of the constant growth model? $1.58
7. Given the following information, what is the stock price of Firm X?

8. The perpetual growth rate assumption in the model is __________.
Not
reasonable
9. To solve for the cost of capital, the constant growth model can be
manipulated into which of the following?
= D1/P0+g
10. Given a growth rate of 4%, a dividend that is forecasted to be $1.50 next year, and an expected return of 11%, what is the numerator of the constant growth model? $1.50
11. The constant growth model will likely be most appropriate for __________.
Mature firms

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- Spring '19
- Dr.JamesMiller
- Management, Dividends, Capital Asset Pricing Model, Constant Growth Model, AIU--Q & A & N