1. Our firm has just issued preferred stock called 10/10 preferred. The stock will pay a $10 dividend per year, but the first dividend will not be paid for 10 years. If you require a 9% return on this stock, how much should you pay today (approximately)?
$111.
$99.
$56.
$51.
$47.
2. McGonigal's Meats, Inc. currently pays no dividends. The firm plans to begin paying dividends in 6 years. The first dividend will be $1.50 (D6) and dividends will grow at 6% per year thereafter. Given a required return of 10%, what would you pay for the stock today (approximately)?
$21.17
$23.28
$17.10
$37.50
$15.00
3. The XYZ Corporation just paid a cash dividend of $3.00 today (D0). It is estimated that this firm's dividends will grow at 30% per year for the next two years. After this two year period the growth rate will drop to 6%for the foreseeable future. If you are considering buying XYZ's common stock, and, because of risks involved, require a return of at least 12%, what is the most you should be willing to pay for this stock (approximately)?
$53
$90
$65
$82
$79