Question: 1. Flare Stock will pay the dividend of $2.4 this year. Its dividend yield is 10%. At what price is the stock selling? 2. An

1. Flare Stock will pay the dividend of $2.4 this year. Its dividend yield is 10%. At what price is the stock selling?

2. An oil company has issued preferred stock with $10 annual dividend that will be paid in perpetuity.

a. If the discount rate is 14%. What price must the stock sale?

3. Integrated Potato chips paid a $2 per share dividend yesterday. It is expected to grow steadily at the rate of 4% per year.

a. What is expected dividend in each of next 3 years?

b. If the discount rate of the stock is 12%. At what price will the stock sell if the forecasted price at the end of third year is $20?

c. What is the expected price after 3 years if today it is selling for $15?

4. A company paid dividend $12. Company is expected to grow the dividend at 10% per year for next 3 years and then at 6% per year forever. What is the price of stock at the end of third year if your discount rate is 14%?

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