Q.1Nofal Corporation will pay a $4.00 per share dividend next year. The company pledges to increase its dividend by 5.5 percent per year, indefinitely. Required:If you require a return of 9 percent on your investment, how much will you pay for the companys stock today? Q.2 Raffalovich, Inc., is expected to maintain a constant 5.45 percent growth rate in its dividends, indefinitely.Required:If the company has a dividend yield of 3.95 percent, what is the required return on the companys stock? Q.3 Youve collected the following information from your favorite financial website. 52-Week PriceStock (Div)DivYld %PERatioClosePriceNetChgHiLo79.3 10.62 Palm Coal 0.553.5 6 15.80 0.24 55.81 33.42 Lake Lead Grp 1.543.8 10 40.43 0.01 130.93 69.50 SIR 2.002.2 10 88.97 3.07 50.24 13.95 DR Dime 0.805.2 6 15.43 0.26 35.00 20.74 Candy Galore 0.321.5 28 ?? 0.18 According to your research, the growth rate in dividends for Palm Coal for the previous 10 years has been 4.25 percent. Required:If investors feel this growth rate will continue, what is the required return for Palm Coal stock? Q.4 Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $11.10, but management expects to reduce the payout by 5 percent per year, indefinitely. Required:If you require a return of 11 percent on this stock, what will you pay for a share today?
