10 short questions

Required return

%

Staal Corporation will pay a $2.94 per share dividend next year. The company pledges to increase its dividend by 4.5 percent per year indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company’s stock today? (Round your answer to 2 decimal places. (e.g., 32.16))

Stock price

$

Keenan Co. is expected to maintain a constant 6.6 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 8.4 percent, what is the required return on the company’s stock? (Round your answer to 2 decimal places. (e.g., 32.16))

Suppose you know that a company’s stock currently sells for $54 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Current dividend per share

Lane, Inc., has an issue of preferred stock outstanding that pays a $4.35 dividend every year in perpetuity. If this issue currently sells for $95 per share, what is the required return? (Round your answer to 2 decimal places. (e.g., 32.16))

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $11 per share dividend in 10 years and will increase the dividend by 4 percent per year thereafter. If the required return on this stock is 12 percent, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Current share price

Lohn Corporation is expected to pay the following dividends over the next four years: $19, $

15

, $14, and $5.50. Afterward, the company pledges to maintain a constant 3 percent growth rate in dividends forever. If the required return on the stock is 10 percent, what is the current share price? (Round your answer to 2 decimal places. (e.g., 32.16))

Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $10.90, but management expects to reduce the pay out by 5 percent per year indefinitely. If you require a return of 10 percent on this stock, what will you pay for a share today? (Round your answer to 2 decimal places. (e.g., 32.16))

Feeback Corporation stock currently sells for $27 per share. The market requires a return of 10.8 percent on the firm’s stock. If the company maintains a constant 3.4 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Dividend paid per share

You have found the following stock quote for

RJW

Enterprises, Inc., in the financial pages of today’s newspaper.

52-WEEK

YLD

VOL

NET

HI

LO

STOCK (DIV)

PE

100s

CLOSE

CHG

143.85

88.53

2.80

2.0

18,282

??

−

0.43

What was the closing price for this stock that appeared in yesterday’s paper? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Yesterday’s closing price

If the company currently has 31 million shares of stock outstanding, what was net income for the most recent four quarters? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Net income