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  3. 1. isu inc. pays a constant annual dividend of $5

1. ISU Inc. pays a constant annual dividend of $5 on its stock. Current stock...

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Finance

1. ISU Inc. pays a constant annual dividend of $5 on its stock. Current stock price is $30/share. Find out the required rate of return for the company's stock.

2. Gerdin Co. is expected to maintain a constant 4% growth rate per year in its dividends indefinitely. The current price of the company's stock is $20/share. Find out the expected stock price 4 years from today.

3. ABC Inc. just paid out its annual dividend of $1.2/share today. The dividend is expected to grow at a rate of 25% per year for the next 3 years. Afterwards, the growth rate will settle down to 5% per year. Find out current stock price if the required rate of return is 12% per year.

4. Company A has been listed on NYSE for five years. This company has never paid any dividend to its shareholders. It is expected that five years from now, the company will start to issue annual dividend. Suppose the first dividend is $1 per share. The dividend will grow at 20% per year for three years. After that, the growth rate will be 3% forever. Assume the appropriate discount rate is 12%. What is the price of Company A's stock today?

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