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mental Problems with Worked Solutions 1. What is the value of a stock based on the dividend-growth model if the firm currently pays a dividend of $1.30 that is growing annually at 5 percent and the required return is 9 percent? 2. If you purchase the stock in Problem 1 for $31.21, what is the return on the investment? 3. If the risk-free rate is 2.3 percent and the anticipated return on the market is 9.0 percent, what is the value of the stock in Problem 1, if the beta coefficient is 0.92? 4. If the risk-free rate is 2.3 percent and the anticipated return on the market is 9.0 percent, what is the value of the stock in Problem 1 if the beta coefficient is 1.23? 5. Given the following information, compute the following ratios: pricelearnings, pricel book, price/sales, and PEG. Sales $10,000 Earnings $1,500 Total assets $5,000 Equity $2,000 Number of shares outstanding 1,000 Estimated growth rate of earnings 6% Price of the stock $20