111. Springboro Tech is a young start-up company. No
dividends will be paid on the stock over the next 15 years, because the firm
needs to plow back its earnings to fuel growth. The company will pay a $12 per
share dividend in 16 years and will increase the dividend by 3 percent per year
thereafter. What is the current share price if the required return on this
stock is 8 percent?
112. Galloway, Inc. has an odd dividend policy. The
company has just paid a dividend of $7 per share and has announced that it will
increase the dividend by $2 per share for each of the next 5 years, and then
never pay another dividend. How much are you willing to pay per share today to
buy this stock if you require a 15 percent return?
113. Jen’s Fashions is growing quickly. Dividends are
expected to grow at a 22 percent rate for the next 3 years, with the growth
rate falling off to a constant 8 percent thereafter. The required return is 12
percent and the company just paid a $3.80 annual dividend. What is the current
114. Hardwoods, Inc. is a mature manufacturing firm.
The company just paid a $10 dividend, but management expects to reduce the payout
by 9 percent each year, indefinitely. How much are you willing to pay today per
share to buy this stock if you require a 15 percent rate of return?
115. Bechtel Machinery stock currently sells for $50
per share. The market requires a 15 percent return on the firm’s stock. The
company maintains a constant 8 percent growth rate in dividends. What was the
most recent annual dividend per share paid on this stock?
116. Southern Utilities just issued some new preferred
stock. The issue will pay a $19 annual dividend in perpetuity beginning 9 years
from now. What is one share of this stock worth today if the market requires a
7 percent return on this investment?
117. Big Falls Tours just paid a dividend of $1.55 per
share. The dividends are expected to grow at 30 percent for the next 8 years
and then level off to a 7 percent growth rate indefinitely. What is the price
of this stock today given a required return of 15 percent?
118. Harvey County Choppers, Inc. is experiencing
rapid growth. The company expects dividends to grow at 25 percent per year for the
next 7 years before leveling off to 7 percent into perpetuity. The required
return on the stock is 12 percent. What is the current stock price if the
annual dividend share that was just paid was $1.05?
119. Westover Winds just paid a dividend of $2.50 per
share. The company will increase its dividend by 8 percent next year and will
then reduce its dividend growth rate by 2 percentage points per year until it
reaches the industry average of 2 percent dividend growth, after which the
company will keep a constant growth rate forever. What is the price of this
stock today given a required return of 12 percent?