M 17. The next dividend payment by Hillside Markets will be S2.35 per share. The
ID: 2796851 • Letter: M
Question
M 17. The next dividend payment by Hillside Markets will be S2.35 per share. The dividends are anticipated to maintain a 4.5 percent growth rate forever. The stock currently sells for S65 per share. What is the dividend yield? A. 3.20 percent B. 3.62 percent C. 3.81 percent D. 4.50 percent E. 4.81 percent M 18. The Stiller Corporation will pay a $3.80 per share dividend next year. The company pledges to increase its dividend by 2.4 percent indefinitely. How much are you willing to pay to purchase this company's stock today if you require a 6.9 percent return on your investment? A. $55.07 B. $63.09 C. $72.22 D. $78.47 E. $84.44 M 19. Sessler Manufacturers made two announcements concerning its common stock today. First, the company announced that the next annual dividend will be $1.75 a share. Secondly, all dividends after that will decrease by 1.5 percent annually. What is the maximum amount you should pay to purchase a share of this stock today if you require a 14 percent rate of return? A. $11.29 B. S12.64 C. $13.27 D. $14.00 E. $14.21 M 20. Whistle Stop Trains pays a constant $16 dividend on its stock. The company will maintain this dividend for the next 14 years and will then cease paying dividends forever. What is the current price per share if the required return on this stock is 1S percent? A. $77.78 B. $82.48 C. S91.59 D. $106.67 E. $112.00Explanation / Answer
Answer: M 17
Dividend yield = Next dividend/Current price per share
= 2.35/65 *100
= 3.62%
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