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WorksheetsChapter 4 - The Value of Common Stocks
Total questions: 11
Worksheet time: 12mins
Assume General Electric (GE) has about 18.3 billion shares outstanding and the stock price is $57.25. Also, assume the P/E ratio is about 31.5. Calculate the market capitalization for GE. (Approximately)
$1,047.675 billion
$1888.45 billion
$3823.8 billion
None of the above
The Wall Street Journal quotation for a company has the following values: Div: $1.12, PE: 20.4, Close: $52.45. Calculate the dividend pay out ratio for the company (Approximately).
48%
43.56%
42.67%
None of the above
Super Computer Company's stock is selling for $100 per share today. It is expected that this stock will pay a dividend of 6 dollars per share, and then be sold for $109 per share at the end of one year. Calculate the expected rate of return for the shareholders.
20%
15%
10%
25%
CK Company stockholders expect to receive a year-end dividend of $2.5 per share and then be sold for $102.33 dollars per share. If the required rate of return for the stock is 10%, what is the current value of the stock?
$95.3
$122.4
$91.97
None of the above
Deluxe Company expects to pay a dividend of $2.32 per share at the end of year-1, $3.1 per share at the end of year-2, $2.56 per share at the end of year-3 and then be sold for $87 per share. If the required rate on the stock is 12%, what is the current value of the stock?
$68
$62.17
$68.29
None of the given answers
Casino Inc. is expected to pay a dividend of $3 per share at the end of year-1 (D1) and these dividends are expected to grow at a constant rate of 6% per year forever. If the required rate of return on the stock is 12%, what is the current value of the stock today?
$25
$50
$100
$54
Will Co. is expected to pay a dividend of $2 per share at the end of year -1(D1) and the dividends are expected to grow at a constant rate of 4% forever. If the current price of the stock is $18.18 per share calculate the expected return or the cost of equity capital for the firm.
15%
4%
14%
None of the given answers
Dividend growth rate for a stable firm can be estimated as:
Plow back rate/the return on equity (ROE)
Plow back rate * the return on equity (ROE)
Plow back rate + the return on equity (ROE)
Plow back rate - the return on equity (ROE)
Otobai Motor Company is currently paying a dividend of $3.4 per year. The dividends are expected to grow at a rate of 8% for the next three years and then a constant rate of 4% thereafter. What is the expected dividend per share in year 5?
$4.63
$5.54
$5.00
None of the given answers
MJ Co. pays out 50% of its earnings as dividends. Its return on equity is 12%. What is the stable dividend growth rate for the firm?
5%
6%
7%
15%
The Extreme Reaches Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $3, $5, $7.50, and $10 a share over the next four years, respectively. After that the dividend will be a constant $2.50 per share per year. What is the current price of this stock if the rate of return is 14 percent?
$31.96
$24.59
$28.03
None of the given answers
