Problem 11-01

The dividend-growth model may be used to value a stock

Round your answers to the nearest cent.

A. What is the value of a stock if: D0 = $4.10 k = 15% g = 9%

$___________

B. What is the value of this stock if the dividend is increased to $5.30 and the other variables remain constant?$___________

C.What is the value of this stock if the required return declines to 11 percent and the other variables remain constant?$___________

D.What is the value of this stock if the growth rate declines to 6 percent and the other variables remain constant?$___________

E.What is the value of this stock if the dividend is increased to $5.40, the growth rate declines to 6 percent, and the required return remains 15 percent?$___________