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Posted on 2014-04-17 11:49:00 in Finance by TONY

1.Gontier Corporation stock currentl y sells for $53.95 per share. The market requires a return of 12 percent on the firm's stock. If the company maintains a constant 5.5 percent growth rate in  dividends, what was the most recent dividend per share paid on the stock?

2. Alexander Corp. will pay a dividend of $2.72 next year. The company has stated that it will maintain a constant growth rate of 4.5 percent a year forever.

a) If you want a return of 12 percent, how much will you pay for the stock?

b) What if you want a return of 8 percent?

c) What does this tell you about the relationship between the required return and the stock price

1..Hot Wings, Inc. has an odd dividend policy. The company has just paid a dividend of $4 per share and has announced that it will increase the dividend by $5 per share for each of the next four years, and then never pay another dividend. If you require a return of 12 percent on the company's stock, how much will you pay for a share today?

2. An investment has an installed cost of $673,658. The cash flows over the four year life of the investment are projected to be $228,701, $281,182, $219,209, and $190,376.

a) If the discount rate is zero, what is the NPV?
b) If the discount rate is infinite, what is the NPV?
c) At what discount rate is the NPV just equal to zero?

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