1) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. You expect it...

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1) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. You expect it to pay a $3.00 dividend in one year. You believe you can sell the stock for $21.00 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay? 2) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. In addition to the dividend and price from year one you expect it to pay a $3.30 dividend in two years. You believe you can sell the stock for $23.10 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay? 3) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. In addition to the dividend and price from year one and two you expect it to pay a $3.63 dividend in three years. You believe you can sell the stock for $25.41 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay? 4) Suppose a stock is expected to pay a $1.25 dividend every quarter and the required return is 8% with quarterly compounding. What is the price? 5) Suppose Little Mike's Pizza, Inc. just paid a dividend of $.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for? 6) Suppose Wellwater, Inc. is expected to pay a $5 dividend in one year. If the dividend is expected to grow at 8% per year and the required return is 12%, what is the price? 7) Aligator Clothing Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%. What is the current price? 8) Aligator Clothing Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%. What is the price expected to be in year 4? 9) A firm's stock is selling for $20.00. They just paid a $1 dividend and dividends are expected to grow at 10% per year. What is the required return? 10) Suppose we are trying to value the company Positive Alpha, a real estate developer that does not pay dividends. If the appropriate industry PE for this type of company is 18 and you predict earnings to be $4.00 per share for the coming year. What is the forecasted stock price for a year from now? 11) What are the assumptions/conditions for the Constant Growth Model? 12) What are the features of common stock? 13) What are the characteristics of dividends? 14) What are the features of preferred stock? 15) Compare and contrast the NYSE and the NASDAQ stock markets. 1) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. You expect it to pay a $3.00 dividend in one year. You believe you can sell the stock for $21.00 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay? 2) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. In addition to the dividend and price from year one you expect it to pay a $3.30 dividend in two years. You believe you can sell the stock for $23.10 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay? 3) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. In addition to the dividend and price from year one and two you expect it to pay a $3.63 dividend in three years. You believe you can sell the stock for $25.41 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay? 4) Suppose a stock is expected to pay a $1.25 dividend every quarter and the required return is 8% with quarterly compounding. What is the price? 5) Suppose Little Mike's Pizza, Inc. just paid a dividend of $.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for? 6) Suppose Wellwater, Inc. is expected to pay a $5 dividend in one year. If the dividend is expected to grow at 8% per year and the required return is 12%, what is the price? 7) Aligator Clothing Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%. What is the current price? 8) Aligator Clothing Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%. What is the price expected to be in year 4? 9) A firm's stock is selling for $20.00. They just paid a $1 dividend and dividends are expected to grow at 10% per year. What is the required return? 10) Suppose we are trying to value the company Positive Alpha, a real estate developer that does not pay dividends. If the appropriate industry PE for this type of company is 18 and you predict earnings to be $4.00 per share for the coming year. What is the forecasted stock price for a year from now? 11) What are the assumptions/conditions for the Constant Growth Model? 12) What are the features of common stock? 13) What are the characteristics of dividends? 14) What are the features of preferred stock? 15) Compare and contrast the NYSE and the NASDAQ stock markets.

Answer rating: 100% (QA)

ANSWER Assumptionsconditions for the Constant Growth Model Dividends grow at a constant rate g The r... View the full answer