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44. If the dividend yield for year 1 is expected to be 5% based on a stock price of $25, what
will the year 4 dividend be if dividends grow annually at a constant rate of 6%?
45. Dani's just paid an annual dividend of $6 per share. What is the dividend expected to be
in five years if the growth rate is 4.2%?
46. The value of common stock will likely decrease if:
47. When valuing stock with the dividend discount model, the present value of future
dividends will:
48. What should be the price for a common stock paying $3.50 annually in dividends if the
growth rate is zero and the discount rate is 8%?
49. What should you pay for a stock if next year's annual dividend is forecast to be $5.25, the
constant-growth rate is 2.85%, and you require a 15.5% rate of return?
50. What price would you pay today for a stock if you require a rate of return of 13%, the
dividend growth rate is 3.6%, and the firm recently paid an annual dividend of $2.50?
51. What constant-growth rate in dividends is expected for a stock valued at $32.40 if next
year's dividend is forecast at $2.20 and the appropriate discount rate is 13.6%?
52. What rate of return is expected from a stock that sells for $30 per share, pays $1.54
annually in dividends, and is expected to sell for $32.80 per share in one year?
53. ABC common stock is expected to have extraordinary growth of 20% per year for 2 years,
after which the growth rate will settle into a constant 6%. If the discount rate is 15% and the most
recent dividend was $2.50, what should be the approximate current share price?
54. What would be the approximate expected price of a stock when dividends are expected to
grow at a 25% rate for 3 years, then grow at a constant rate of 5%, if the stock's required return is
13% and next year's dividend will be $4.00?
55. A company with a return on equity of 15% and a plowback ratio of 60% would expect a
constant-growth rate of:
56. What is the plowback ratio for a firm that has earnings per share of $2.68 and pays out
$1.75 per share in dividends?
57. A positive value for PVGO suggests that the firm has:
58. Which of the following situations accurately describes a growth stock, assuming that
each firm has a required return of 12%?
59. Other things equal, a firm's sustainable growth rate could increase as a result of:
60. Under which of the following forms of market efficiency would stock prices
always
reflect
fair value?
61. Investors are willing to purchase stocks having high P/E ratios because:
62. Which of the following is
least
likely to contribute to going concern value?
63. What happens to a firm that reinvests its earnings at a rate equal to the firm's required
return?
64. What can be expected to happen when stocks having the same expected risk
do not
have
the same expected return?
65. The terminal value of a share of stock:
66. A stock is expected to pay dividends of $1.20 per share in Year 1 and $1.35 per share in
Year 2. After that, the dividend is expected to increase by 2.5% annually. What is the current
value of the stock at a discount rate of 14.5%?
67. Jefferson's recently paid an annual dividend of $1.31 per share. The dividend is expected
to decrease by 4% each year. How much should you pay for this stock today if your required
return is 16%?
68. Which one of the following is
more
likely to be responsible for a firm having a low PVGO?
69. What is the most likely value of the PVGO for a stock with a current price of $50,
expected earnings of $6 per share, and a required return of 20%?
70. What is the expected constant-growth rate of dividends for a stock with a current price of
$87, an expected dividend payment of $5.40 per share, and a required return of 16%?
