# Question_MID2_10Dec_2nd

Question # 00005113 Posted By: smartwriter Updated on: 12/10/2013 02:47 PM Due on: 12/31/2013
Question

31. Whited Inc.'s stock currently sells for \$35.25 per share. The dividend is projected to increase at a constant rate of 4.75% per year. The required rate of return on the stock, rs, is 11.50%. What is the stock's expected price 5 years from now?

a. \$40.17

b. \$41.20

c. \$42.26

d. \$43.34

e. \$44.46

32. Casino Inc. is expected to pay a dividend of \$6 per share at the end of year one and these dividends are expected to grow at a constant rate of 6% per year forever. If the required rate of return on the stock is 18%, what is current value of the stock today?

A) \$30

B) \$50

C) \$100

D) \$54

33. Dividend growth rate for a stable firm can be estimated as:

A) Plow back rate / the return on equity (ROE)

B) Plow back rate * the return on equity (ROE)

C) Plow back rate + the return on equity (ROE)

D) Plow back rate - the return on equity (ROE)

34. A four-year bond has an 8% coupon rate and a face value of \$1000. If the current price of the bond is \$878.31, calculate the yield to maturity of the bond (assuming annual interest payments).

A) 8%

B) 12%

C) 10%

D) 6%

35. Super Computer Company's stock is selling for \$100 per share today. It is expected that this stock will pay a dividend of 5 dollars per share, and then be sold for \$120 per share at the end of one year. Calculate the expected rate of return for the shareholders.

A) 20%

B) 15%

C) 10%

D) 25%

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1. ## Solution: Question_MID2_10Dec_2nd - Answer

Tutorial # 00004907 Posted By: smartwriter Posted on: 12/10/2013 02:48 PM
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