1. Suppose the required rate of return on stock is 11% and the growth rate is 5%....

Question:

1. Suppose the required rate of return on stock is 11% and the growth rate is 5%. If the current price of stock is $20, then what is the value of D1 (next period's dividend)?

2. Suppose the required rate of return on stock is 7.5% and the growth rate is 4.5%. If the current price of stock is $80, then what is the value of Do?

3. Suppose the current price of stock is $25. What is the growth rate if next period's dividend is $2 and the required rate of return on stock is 12%?

4. Suppose the current price of stock is $72. What is the growth rate if current period's dividend (Do) is $3 and the required rate of return on stock is 9.375%?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...