# The common stock of ABC Industries is valued at \$39.4 a share. The company increases their dividend by 4.3 percent annually and expects their next…

1.      The common stock of ABC Industries is valued at \$39.4 a share. The company increases their dividend by 4.3 percent annually and expects their next dividend to be \$0.3. What is the required rate of return on this stock? That is, solve for r.

2.      ABC Enterprises’ stock is currently selling for \$79.1 per share. The dividend is projected to increase at a constant rate of 3.8% per year. The required rate of return on the stock is 12%. What is the stock’s expected price 5 years from today (i.e. solve for P5)?

3.      If D0 = \$4, g = 5.3%, and P0 = \$78.1, what is the required rate of return on the stock? That is, solve for r.

4.      ABC’s last dividend paid was \$1, its required return is 14.6%, its growth rate is 4.4%, and its growth rate is expected to be constant in the future. What is Sorenson’s expected stock price in 7 years, i.e., what is P7?

5.      A stock just paid a dividend of D0 = \$0.8. The required rate of return is rs = 13.4%, and the constant growth rate is g = 5.8%. What is the current stock price?

6.      ABC is expected to pay a dividend of \$5.7 per share at the end of the year. The stock sells for \$150 per share, and its required rate of return is 10.7%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

7.      If D1 = \$3.26 and P0 = \$122.43, what is the dividend yield?

8.      ABC Enterprises’ stock is expected to pay a dividend of \$2.6 per share. The dividend is projected to increase at a constant rate of 3.6% per year. The required rate of return on the stock is 16.9%. What is the stock’s expected price 3 years from today (i.e. solve for P3)?

9.      ABC Inc., is expected to pay an annual dividend of \$4.8 per share next year. The required return is 15.8 percent and the growth rate is 8.6 percent. What is the expected value of this stock five years from now?

10.  A stock is expected to pay a dividend of \$1.5 at the end of the year. The required rate of return is rs = 9.1%, and the expected constant growth rate is g = 7.5%. What is the stock’s current price?

11.  ABC just paid a dividend of D0 = \$4.3. Analysts expect the company’s dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 14%. What is the best estimate of the stock’s current market value?

12.  The common stock of Wetmore Industries is valued at \$40.8 a share. The company increases their dividend by 3 percent annually and expects their next dividend to be \$5.9. What is the required rate of return on this stock? That is, solve for r.

13.  ABC’s last dividend was \$0.3. The dividend growth rate is expected to be constant at 34% for 3 years, after which dividends are expected to grow at a rate of 7% forever. If the firm’s required return (rs) is 16%, what is its current stock price (i.e. solve for Po)?

14.  ABC Company’s last dividend was \$2.4. The dividend growth rate is expected to be constant at 27% for 2 years, after which dividends are expected to grow at a rate of 7% forever. The firm’s required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?

15.  If D1 = \$4.4, g (which is constant) = 5.9%, and P0 = \$75.7, what is the required rate of return on the stock? That is, solve for r.

16.  ABC’s stock has a required rate of return of 13.7%, and it sells for \$53 per share. The dividend is expected to grow at a constant rate of 6.9% per year. What is the expected year-end dividend, D1? 