How much should you pay for the preferred stock of the Dakota Doorknob Company if it has $100 par value, pays $8.50 a share in annual dividends, and your required rate of return is 10 percent?
NDV Corp.'s common stock is expected to pay a $2 dividend, which will grow at a compound rate of 4 percent indefinitely.
- If the market requires a 14 percent return, what should be the current market price of the
- If the current market price of the stock is $40, what rate of return is the market requiring
he stock of Macbeth Cleaning Corp. is currently selling for $25 a share. The company is expected to pay a dividend of $0.75 at the end of this year. If you bought Macbeth stock today and sold
...it for $29 after receiving the dividend, what rate of return would you earn?
Sooty Iron Works, Inc. has had declining sales and increasing expenses over the last decade and expects this trend to continue. As a result, the company predicts that earnings and dividends will decline indefinitely at a rate of 4 percent per year. Sooty's last dividend (D0) was $2 per share. If the market required rate of return is 12 percent, estimate the value of Sooty's common stock.
You are interested in purchasing the common stock of Azure Corporation. The firm paid recently a dividend of $3 per share. It expects earnings to grow at a rate of 7% for the foreseeable future. Currently, similar risk stocks have required returns of 10%.
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