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URGENT

QUESTION 1

1. You are evaluating the purchase of Charbridge, Inc. common stock which currently pays no dividend and is not expected to do so for many years. Because of rapidly growing sales and profits, you believe the stock will be worth $125.50 in 3 years. If your required rate of return is 16%, what is the stock worth today?

   (Answer in 2 decimal places & without $ sign)

20 points

QUESTION 2

1. Simpson Industries Inc. pays a $1.5 dividend every quarter and will maintain this policy forever. What price should you pay for one share of common stock if you want an annual return of 12.5% on your investment?

   (Answer in 2 decimal places and without $ sign.)

20 points

QUESTION 3

1. Green Company's common stock is currently selling at $34.00 per share. The company recently paid dividends of $1.92 per share and projects growth at a rate of 4%. At this rate, what is the stock's expected rate of return?

   (Answer should be in %, 2 decimal places & without the % sign.)

20 points

QUESTION 4

1. You are considering the purchase of Miller Manufacturing, Inc.'s common stock. The stock is selling for $21.00 per share. The next dividend is expected to be $2.10, and you expect the dividend to keep growing at a constant rate. If the stock is returning 15%, calculate the growth rate of dividends.

   (Answer should be in %, write your answer in 2 decimal places & without the % sign.)

20 points

QUESTION 5

1. Noel Company's common stock has just paid a $1.50 dividend. If investors believe that the expected rate of return on P. Noel is 14% and that dividends will grow at the rate of 5% per year for the foreseeable future, what is the value of a share of P. Noel stock?

   (Answer in 2 decimal places & without $ sign.)

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