Suppose you know a company's stock currently sells for $85 per share and the required return on the stock is 10 percent

Suppose you know a company's stock currently sells for $85 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. What is the current dividend if it's the company's policy to always maintain a constant growth rate in its dividends?    A.  $3.18 B.  $4.05 C.  $4.37 D.  $4.50 E.  $4.64 Dividend yield = 0.10/2 = 0.05 D1 = 0.05 × $85 = $4.25 D0 = $4.25/1.05 = $4.05

102.

Whistle Stop Trains pays a constant $16 dividend on its stock. The company will maintain this dividend for the next 14 years and will then cease paying dividends forever. What is the current price per share if the required return on this stock is 15 percent?    A.  $77.78 B.  $82.48 C.  $91.59 D.  $106.67 E.  $112.00

103.

Morristown Industries has an issue of preferred stock outstanding that pays a $12.60 dividend every year in perpetuity. What is the required return if this issue currently sells for $80 per share?    A.  15.75 percent B.  16.72 percent C.  16.80 percent D.  16.86 percent E.  16.95 percent R = $12.60/$80 = 15.75 percent