1. What would you pay for a share of ABC Corporation stock today if the next dividend...
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Question:
1. What would you pay for a share of ABC Corporation stock today if the next dividend will be $2 per share, your required return on equity investments is 12%, and the stock is expected to be worth $110 one year from now?
A) $95
B) $100
C) $110
D) $115
E) $120
2. A stock that pays a constant dividend of $2.50 forever currently sells for $20.00. What is the required rate of return?
A) 11.0%
B) 11.5%
C) 12.0%
D) 12.5%
E) 13.0%
3. What would you pay today for a stock that is expected to make a $1.50 dividend in one year if the expected dividend growth rate is 3% and you require a 16% return on your investment?
A) $11.54
B) $12.33
C) $12.43
D) $13.14
E) $14.30
plz choose an answer and explain why with formula
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