a) Winter Vine (WV) stock will not pay a dividend until three years from now, and the first dividend is expected to be $2 per share You predict that the dividend payout ratio is 40 and WV's ROE is 15 If WVs market capitalization rate is 12 , what is its dividend growth rate A 7 B 8 C 9 D 10 b) Lock Down Airlines (LA) is expected to pay a dividend of $3 next year, and its subsequent dividends are expected to grow at a rate of 10 per year LA has a beta of 4 The current risk free rate is 4 and the market return is 13 What is the intrinsic value of LA A $10 00 B $22 74 C $27 79 D $41 66

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Question: a) Winter Vine (WV) stock will not pay a dividend until three years from now, and the first dividend is expected to be $2 per

a) Winter Vine (WV) stock will not pay a dividend until three years from now, and the first dividend is expected to be $2 per share. You predict that the dividend payout ratio is 40% and WV's ROE is 15%. If WVs market capitalization rate is 12%, what is its dividend growth rate?

	A.	7%
	B.	8%
	C.	9%
	D.	10%

b) Lock-Down Airlines (LA) is expected to pay a dividend of $3 next year, and its subsequent dividends are expected to grow at a rate of 10% per year. LA has a beta of 4. The current risk-free rate is 4% and the market return is 13%. What is the intrinsic value of LA?

	A.	$10.00
	B.	$22.74
	C.	$27.79
	D.	$41.66

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