Question

Please Answer the following questions:

1. The required rate of return is 24.40 percent. Oriole Corp. has just paid a dividend of $3.12 and is expected to increase its dividend at a constant rate of 6.35 percent. What is the expected price of the stock three years from now? (Round answer to 2 decimal places, e.g. 15.20.)

Expected Price ?

2. Thomas Taylor is interested in purchasing the common stock of Sandhill, Inc., which is currently priced at $39.99. The company is expected to pay a dividend of $2.58 next year and to increase its dividend at a constant rate of 7.45 percent.What should the market value of the stock be if the required rate of return is 14 percent? (Round answer to 2 decimal places, e.g. 15.20.)

Market Value Of Stock ?

3.Each quarter, Oriole, Inc., pays a dividend on its perpetual preferred stock. Today the stock is selling at $63.50. If the required rate of return for such stocks is 16.00 percent, what is the quarterly dividend paid by this Oriole? (Round answer to 2 decimal places, e.g. 15.25.)

Quarterly Dividend Paid ?

4.Carla Vista Corp. paid a dividend of $2.40 yesterday. The company’s dividend is expected to grow at a steady rate of 5 percent for the foreseeable future. If investors in stocks of companies like Carla Vista require a rate of return of 15 percent, what should be the market price of Carla Vista stock? (Round dividend to 3 decimal places, e.g. 3.756 and round final answer to 2 decimal places, e.g. 15.25.)

Market Price ?

5.Sunland, Inc., paid a dividend of $3.80 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 19.0 percent, what is the current value of the stock? (Round answer to 2 decimal places, e.g. 15.25.)

Current Value ?

6. You are currently thinking about investing in a stock valued at $22 per share. The stock recently paid a dividend of $2.40 and its dividend is expected to grow at a rate of 4 percent for the foreseeable future. You normally require a return of 14 percent on stocks of similar risk. Is the stock overpriced, underpriced, or correctly priced? (Round answer to 2 decimal places, e.g. 52.75.)

Current Value of stock ?

The Stock is (Under, Correctly, or over priced) at $22 ?

Answer 1

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