Managerial Finance Quiz

Question 1

1. The common stock of Connor, Inc., is selling for $64 a share and has a dividend yield of 3.8 percent. What is the dividend amount?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 2

1. A stock just paid a dividend of $2.3. The required rate of return is 9.2%, and the constant growth rate is 7.2%. What is the current stock price?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 3

1. ABC's stock has a required rate of return of 12.9%, and it sells for $52 per share. The dividend is expected to grow at a constant rate of 8.4% per year. What is the expected year-end dividend, D₁?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 4

1. A stock is expected to pay a dividend of $2.3 at the end of the year. The required rate of return is r_s = 15.1%, and the expected constant growth rate is g = 7.8%. What is the stock's current price?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 5

1. ABC Inc., is expected to pay an annual dividend of $4 per share next year. The required return is 15.6 percent and the growth rate is 4.3 percent. What is the expected value of this stock five years from now?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 6

1. If last dividend = $4.6, g = 3.8%, and P₀ = $77.3, what is the stock’s expected total return for the coming year?

   Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 7

1. ABC Enterprises' stock is currently selling for $40.3 per share. The dividend is projected to increase at a constant rate of 8% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 8

1. ABC's last dividend was $3.5. The dividend growth rate is expected to be constant at 24% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (r_s) is 13%, what is its current stock price (i.e. solve for Po)?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 9

1. The common stock of Wetmore Industries is valued at $44.5 a share. The company increases their dividend by 5.8 percent annually and expects their next dividend to be $3.2. What is the required rate of return on this stock?

   Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 10

1. ABC’s last dividend paid was $2.6, its required return is 12.6%, its growth rate is 3.4%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 11

1. If D₁ = $2.4, g (which is constant) = 7.3%, and P₀ = $63.9, what is the stock’s expected total return for the coming year?

   Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 12

1. ABC just paid a dividend of D₀ = $3.2. Analysts expect the company's dividend to grow by 32% this year, by 21% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 17%. What is the best estimate of the stock’s current market value?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 13

1. ABC Company's last dividend was $0.7. The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (r_s) is 16%. What is its current stock price (i.e. solve for Po)?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 14

1. ABC Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 7.5% per year.The required rate of return on the stock is 19.3%. What is the stock's expected price 3 years from today (i.e. solve for P3)?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 15

1. ABC is expected to pay a dividend of $5.5 per share at the end of the year. The stock sells for $189 per share, and its required rate of return is 14.4%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

   Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

Question 16

1. A stock just paid a dividend of D₀ = $2. The required rate of return is r_s = 13.6%, and the constant growth rate is g = 6.6%. What is the current stock price?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 17

1. A stock's next dividend is expected to be $1.8. The required rate of return on stock is 16.3%, and the expected constant growth rate is 7.6%.What is the stock's current price?

   Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

Question 18

1. If D₁ = $3.18, g (which is constant) = 2%, and P₀ = $89.61, what is the stock’s expected dividend yield for the coming year?

   Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.