COMPUTER APPLICATIONS IN FINANCE FIN 3450 ASSIGNMENT 3 INDIVIDUAL ASSIGNMENT ALL SUBMISSIONS SHOULD BE IN EXCEL WORKSHEET

Problem 1: A share of common stock has an expected long-run constant dividend growth rate of 6%, and the most recent dividend D₀, was $5.00. The required rate of return on the stock is 14%. Calculate the current price of the stock using the constant dividend growth model. Problem 2: Given the following information, calculate the price of the common stock using constant dividend growth model.

Risk-free rate ( Rf ) = 4%; Market Rate of Return ( Rm ) =12%

Beta of the Stock = 1.25 Expected end of the year Dividend = $2.00/per share Constant dividend growth rate = 6% per year [Hint: First calculate the required rate of return for the stock using CAPM]

Problem 3: A firm can grow at a high rate of 15% for the next 5-years; and hence its dividends. It has an expected long-run constant dividend growth rate of 7%, and the most recent dividend D₀, was $5.00. The required rate of return on the stock is 20%. Calculate the current price of the stock using two-stage dividend growth model. Problem 4: If the dividends on a preferred stock is $9 per year, and the required rate of return on the stock is 12%, then calculate the current price of the preferred stock