1. What is the required rate of return on a common stock that is expected to pay a $0.75 annual dividend next year if dividends are expected to grow at 2% annually and the current stock price is $8.59?
2. Inc. paid $.130 as an annual dividend per share last year. The company is expected to increase their annual divisions by 6% each year. How much should pay to purchase one share if you require a 9% return not this investment?
3. Newton paid an annual dividend of $.95. Their dividends are expected to increase by 4% annually. Newton is selling for $11.54 a share. What is the required rate of return on this stock implied by the dividend growth model?
4. Martin is expected to pay annual dividends of $2.50 a share for the next 2 years. After that, dividends are expected to increase by 3% annually. What is the current value of the is stock to you if you require to a 9% rate of return on this investment?
Please provide an explanation or formula on how you arrived to the answer