QAs
Mr.Q
hw04-fin320.docxSOUTHERN NEW HAMPSHIRE UNIVERSITY
School of Business
FIN 320
FIN320: Homework # 4
1. Abel, Inc. just paid a dividend of $3 per share and you think they will continue to pay $3 per year indefinitely. If the appropriate discount rate is 10%, how much should the price of a share be?
2. What do you expect the price of Abel, Inc. to be in one year?
3. Betty Corp. just paid a dividend of $3 per share and you think dividends will grow at 2% a year indefinitely. If the appropriate discount rate is 10%, how much should the price of a share be?
4. What do you expect the price of Betty Corp. to be in one year?
5. Charlie Co. currently pays no dividends. However, you believe that four years from now they will pay a dividend of $3 per share. After that, you think dividends will grow at 2% a year indefinitely. If the appropriate discount rate is 10%, how much should the price of a share be?
6. What do you expect the price of Charlie Co. to be in one year?
7. Danica, Ltd. Just paid a dividend of $3 per share. You think the company will pay $3 per year for the next four years. After that, you think dividends will grow at 2% a year indefinitely. If the appropriate discount rate is 10%, how much should the price of a share be?
