Question 1 (3.3 points) There is a small company that currently does not pay dividends. However, 4 years from now the company is expected to pay an annual dividend of $1.50 (Hint: D4=$1.50). The dividend will then grow by 4% annually forever. Suppose the market requires an annual return of 6% on the company’s stocks, what should be the stock price today?
A) $62.97.
B) $61.78.
C) $59.41.
D) $60.60.
Question 2 (3.3 points) Shane bought 200 shares of a stock at $35 per share six months ago. He received one dividend of $1 per share. The share price right now is $33 per share. What is Shane’s total dollar return?
A) – $200.
B) – $400.
C) – $100.
D) $100. Get Finance Help Today
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