1. What should be the stock value one year from today for a stock that currently sells for $35, has a required return of 15%, an expected dividend of $2.80, and a constant dividend growth rate of 7%?

$37.45

$37.80

$40.25

$43.05

2. Horizon just announced that next dividend will be $3 and the dividend will increase by 2% annually thereafter. How much will one share of this stock be worth six years from now if the required rate of return is 12%?

$33.8

$34.5

$46.4

$47.8

3.Sustainable growth rates can be estimated by multiplying a firm's ROE by its dividend payout ratio.

True

False