Question: Question 25 ATEM Co. will pay dividends $2, $3, and $5, at the end of years 1, 2, and 3, respectively. After that, dividends will

Question 25

ATEM Co. will pay dividends $2, $3, and $5, at the end of years 1, 2, and 3, respectively. After that, dividends will grow at 6% per year. If the required rate of return is 8%, what is the value of one share today?

  1. $220.61
  2. $218.76
  3. $217.83
  4. $219.68
  5. $221.54

Question 26

Saturn Co. just paid an annual dividend of $5 per share, and its dividends are expected to grow at the constant rate of 5% per year. If the share price of Saturn Co. is currently $100, what is the required annual rate of return on Saturn Co.?

  1. 12.35%
  2. 11.30%
  3. 10.25%
  4. 13.40%
  5. 9.20%

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