Question

1. Over the past 5 years, DL Insulation has paid annual dividends of $1.40, $1.55, $1.70, $1.73, and $1.77 per share. What is the geometric average dividend growth rate for this period?
A. 4.80 percent
B. 5.79 percent

C. 5.88 percent D. 6.04 percent E. 6.33 percent

2.A firm has a current book value per share of $21.10 and a market price per share of $37.57. Next year's earnings are expected to be $5.60 per share and the expected earnings growth rate is 2.5 percent. What is the required rate of return on this stock?
A. 14 percent
B. 15 percent
C. 16 percent
D. 17 percent
E. 18 percent

Answer 1

1)