aferences Mailings Review View AaRbCdDDE AalbCeDdE AaBbCcDc Aa Bbcode Aa Heading 1 Heading 2 E Normal No Spacing Stock Valuation a) The common stock of Princess Inc. has just paid $1.50 in dividends. Dividends are expected to grow at an 8 percent annual rate for an indefinite number of years. If the required rate of return is 12%, what is the intrinsic value of Princess Inc.'s common stock? b) A firm's common stock is currently selling for $12.50 per share. The required rate of return is 9% p.a. and the company will pay an annual dividend of $0.50 per share one year from now (D1), which will grow at a constant rate for the next several years. What is the growth rate? c) Perry Motors's common stock currently pays an annual dividend of RM1.80 per share. The required return on the common stock is 12%. Estimate the present value of the common stock if the dividends are expected to grow at a constant annual rate of 5%. d) CIMB Ld. has been paying good dividends to shareholders for the past years. In view of its recent superb company performance, investors expect CIMB's next dividend to be $5 per share in year 1, $8 per share in year 2 and S12 per share in year 3. Investors expect the share price of CIMB Ltd to be $160 at the end of year 3. If investors' required rate of return is 13%, what is CIMB Ltd.'s current market value of its common stock? c) Genting Ltd. has been paying annual dividends of $1.50 per share. In view of its recent superb company performance, investors expect Genting's next dividend to be 20% higher. After that, annual growth rate is expected to shoot up to 30%p.a. for two years, followed by a growth rate of 25% p.a. for another 2 years before stabilizing at a sustainable rate of 10% p.a. If investors' required rate of return is 13%, what is Genting Ltd.'s current market value of its common stock? 1) You expect XYZ stock to pay a $5.50 dividend at the end of the year. The stock price is expected to be $120 at that time. If you require a 15% rate of return, what would you pay for the stock now? (hint: 1 year holding) g) ABC company has been paying $3.50 of dividend for many years and it is expected to O Focus MacBook Air