Question 1. A stock had a price at the beginning of the year of $100 and was selling for $102 at the end of the year. If the total shareholder returns were 5 percent, then the cash dividend per share must have been what?
Question 2. A firm with a 50 percent debt ratio faces a 40 percent tax rate and pays a 10 percent interest rate on its debt. If the return on assets is 20 percent the return on equity will be what?
Question 3. If the firm has a constant dividend payout ratio of 20 percent, and desires a sustainable growth rate of 20 percent, it must have a return on equity equal to what?
Question 4. Under the dividend-discount model, what is the value of a share of stock that is expected to pay a $7.50 end-of-year dividend and have an ex-dividend price of $55 if the risk-adjusted discount rate is 7.5%?