Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing

Shares of Hot Donuts common stock are currently selling for $32.35. The last annual dividend paid was $1.25 per share and the market rate of return is 10.7 percent. At what rate is the dividend growing?    A.  6.58 percent B.  8.67 percent C.  10.42 percent D.  12.60 percent E.  14.10 percent

AACSB: Analytic Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-01 How stock prices depend on future dividends and dividend growth. Section: 8.1 Topic: Dividend growth rate

80.

Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15 percent a year for the next 4 years and then decreasing the growth rate to 3.5 percent per year. The company just paid its annual dividend in the amount of $0.20 per share. What is the current value of one share of this stock if the required rate of return is 15.5 percent?    A.  $1.82 B.  $2.04 C.  $2.49 D.  $2.71 E.  $3.05

 

81.

KL Airlines paid an annual dividend of $1.18 a share last month. The company is planning on paying $1.50, $1.75, and $1.80 a share over the next 3 years, respectively. After that, the dividend will be constant at $1.50 per share per year. What is the market price of this stock if the market rate of return is 10.5 percent?    A.  $13.98 B.  $14.07 C.  $14.71 D.  $17.16 E.  $18.10