Problem 11-14 – Perpetuity Model Suppose that a security paid a dividend of $2.

Problem 11-14 – Perpetuity Model
Suppose that a security paid a dividend of $2.1 per share for the year. The dividend is expected to grow by $0.05 per year for 5 years. Afterwards, the dividend will grow at a constant 4% forever. Its required rate is 6%. What is the expected price in five years?
Problem 11-16 – Dividend Discount Model
In three years, a company is expected to pay its first dividend of $1.79 per share per year. At that point, the dividend is expected to grow at 5% per year indefinitely. Also suppose the required rate of return is 8%. What is the value of the stock?
Problem 11-17 – Dividend Discount Model
Suppose that a company will pay a $0.85 per-share-per-year dividend next year. It is expected to increase that dividend by $0.05 each year for three years (to year four). In year four, the PE ratio of the firm is expected to be 21. Earnings were $2.15 per share last year and are expected to grow at 8% each year to year four. Suppose that the required rate of return is 9%. What is the value of the stock?
blem 11-18 – Dividend Discount Model
A company paid a $1.65 per-share-per-year dividend last year. It is expected to increase at an annual 9% growth rate to year five. After year five, the dividend will grow at 7% per year indefinitely. Suppose that the required rate of return is 10%. What is the value of the stock?