1.

Nonconstant Growth Valuation

A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.6, the risk-free rate is 5.5%, and the market risk premium is 6%. What is your estimate of the stock's current price? Round your answer to the nearest cent.

$

2.

Value of Operations of Constant Growth Firm

EMC Corporation has never paid a dividend. Its current free cash flow of $460,000 is expected to grow at a constant rate of 5.1%. The weighted average cost of capital is WACC = 12.75%. Calculate EMC's estimated value of operations. Round your answer to the nearest dollar. $

3.

Constant Growth Valuation

Woidtke Manufacturing's stock currently sells for $39 a share. The stock just paid a dividend of $4.00 a share (i.e., D0 = $4.00), and the dividend is expected to grow forever at a constant rate of 5% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent. $

What is the estimated required rate of return on Woidtke's stock? Round the answer to three decimal places. %