2. A firm does not pay a dividend. It is expected to pay its first dividend of $0.12 per share in three years. This dividend will grow at 9 percent indefinitely. Use a 10 percent discount rate.

Compute the value of this stock. (Round your answer to 2 decimal places.)

stock value=

3. New York Times Co. (NYT) recently earned a profit of $1.91 per share and has a P/E ratio of 19.55. The dividend has been growing at a 8.50 percent rate over the past six years.

If this growth rate continues, what would be the stock price in four years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 24 in 5 years? (Round your answers to 2 decimal places.)

Stock price=

stock price with new p/e=

4. Consider a firm that had been priced using a 12 percent growth rate and a 14 percent required return. The firm recently paid a $1.90 dividend. The firm just announced that because of a new joint venture, it will likely grow at a 12.5 percent rate.

How much should the stock price change (in dollars and percentage)? (Round your answers to 2 decimal places.)

Change in stock price=

change in stock percent=