Question

1. The next dividend payment by Savitz, Inc., will be $4.45 per share. The dividends are...

1. The next dividend payment by Savitz, Inc., will be $4.45 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever.
If the stock currently sells for $44 per share, what is the required return?

Multiple Choice

  • 14.36%

  • 5.00%

  • 15.11%

  • 10.11%

  • 14.81%

2. Hudson Corporation will pay a dividend of $3.30 per share next year. The company pledges to increase its dividend by 3.30 percent per year indefinitely.
If you require a return of 5.40 percent on your investment, how much will you pay for the company's stock today?

Multiple Choice

  • $150.86

  • $157.14

  • $163.43

  • $152.12

  • $36.72

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Answer #1

1

Price = Dividend in 1 year/(Required rate - growth rate)
44 = 4.45/ (Required rate - 0.05)
Required rate % = 15.11
Please ask remaining parts seperately, questions are unrelated
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