View the step-by-step solution to:

# Martin's Yachts has paid annual dividends of \$1.40, \$1.75, and \$2.00 a share over the past three years, respectively.

1(a).
Martin's Yachts has paid annual dividends of \$1.40, \$1.75, and \$2.00 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has leveled off and sales are expected to remain relatively constant. Given the lack of future growth, you will only buy this stock if you can earn at least a 15% rate of return. What is the maximum amount you are willing to pay to buy one share today?
A.   \$10.00
B. \$13.33
C. \$16.67
D. \$18.88
E. \$20.00
1(b).
Martha's Vineyard recently paid a \$3.60 annual dividend on its common stock. This dividend increases at an average rate of 3.5% per year. The stock is currently selling for \$62.10 a share. What is the market rate of return?
A.   2.5%
B. 3.5%
C. 5.5%
D. 6.0%
E. 9.5%

1(a).
Martin's Yachts has paid annual dividends of \$1.40, \$1.75, and \$2.00 a share over the past three years,
respectively. The company now predicts that it will maintain a constant dividend since...

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents