A firm recently paid a $1.00 annual dividend. The dividend is expected to increa

Question

A firm recently paid a $1.00 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $100. if the required rate for this stock is 14 percent, what is its current value? $25.00 $36.00 $62.00 $72.00 investors buy stock at the dealer price bid price quoted ask price broker price best buy co (BBY) paid a $0.27 dividend per share in 2003, which grew to $0.49 in 2007. this growth is expected to continue. what is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent? $2.84 $42.24 $49.03 $50.78 you have $45, 050 to invest. you want to purchase shares of company air at $10.25, company is at $15.10, company F at $9.05. how many shares of each company should you purchase so that your portfolio consists of 30 percent company A, 50 percent company B, and 20 percent company F? report only whole stock shares. company A = 30 shares, company B = 50 shares, company F = 20 shares company A = 44 shares, company B = 30 shares, company F = 50 shares company A = 308 shares, company B = 755 shares, company F = 181 shares company A = 1323 shares, company B = 1490 shares, company F = 993 shares this index tracks 500 companies which allows for a great deal of diversification. fortune 500 S&P; 500 wall street journal

Explanation / Answer

11)

PVF@14% Present value D1 $      1.10 0.877 $                0.96 D2 $      1.21 0.769 $                0.93 D3 $      1.33 0.675 $                0.90 D4 $      1.46 0.592 $                0.87 P4 $ 100.00 0.592 $              59.21 Current share price $              62.87

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