# solution

Find the present value of a stock which will pay a dividend of \$60 later today, with each subsequent annual dividend at a constant \$50, given an annual interest rate of 15%.

Select one:

a. \$355

b. \$319

c. \$393

d. \$410

e. \$429

Suppose you are gifted a stock which would sell for \$750 today, and pays its next dividend of \$45 one year from today. If the current annual discount rate is 9%, what is the growth rate of these dividends?

Select one:

a. 5% a

b. 7%

c. 4%

d. 3%

e. 2%

Find the present value of a stock which will issue a \$35 dividend one year from today, which will grow by 10% per year for the following 3 years and then fall to 4% growth per year for each year after that. Assume an effective annual interest rate of 12%.

Select one:

a. \$507

b. \$566

c. \$720

d. \$442

e. \$401

The Kepler Hospitality Group is in financial trouble: They will issue a \$90 dividend later today, but they expect that dividends will fall by 4% per year for each year after. Find the present value of a share of this companyâ€™s stock, given an annual discount rate of 12%.

Select one:

a. \$670

b. \$630

c. \$790

d. \$540

e. \$710

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