1. A stock’s last dividend was $3.05 per share and the dividends are expected to grow 25% per year for three years. Thereafter, the dividends are expected to grow at a constant rate of 6.5% per year. If investors require a return of 12.8% per year to hold the stock, what is the stock’s intrinsic value per share?
1) $78.63
2) $86.73
3) $91.86
4) $72.20
5) $81.47
2. A zero-coupon bond has a $1,000 par value and its price is $491.79. If its yield to maturity is 5.2% per year, in how many years does the bond mature?
1) 11
2) 14
3) 12
4) 10
5) 13