# FINANCE

24. Selling Stock with Commissions At your full-service brokerage firm, it costs \$110 per stock trade. How much money do you receive after selling 100 shares of Time Warner, Inc. (TMX), which trades at \$22.62?
A. \$2,152.00
B. \$2,262.00
C. \$2,372.00
D. \$2,388.20

25. Selling Stock with Commissions At your full-service brokerage firm, it costs \$120 per stock trade. How much money do you receive after selling 200 shares of Ralph Lauren (RL), which trades at \$85.13?
A. \$16,546.00
B. \$16,906.00
C. \$17,026.00
D. \$17,146.00

26. Buying Stock with a Market Order You would like to buy shares of International Business Machines (IBM). The current bid and ask quotes are \$96.17 and \$96.24, respectively. You place a market buy-order for 100 shares that executes at these quoted prices. How much money did it cost to buy these shares?
A. \$7.00
B. \$9,617.00
C. \$9,624.00
D. \$19,241.00

27. Buying Stock with a Market Order You would like to buy shares of Nokia (NOK). The current bid and ask quotes are \$20.13 and \$20.15, respectively. You place a market buy-order for 300 shares that executes at these quoted prices. How much money did it cost to buy these shares?
A. \$6.00
B. \$6,039.00
C. \$6,045.00
D. \$12,084.00

28. Selling Stock with a Limit Order You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are \$27.22 and \$27.25, respectively. You place a limit sell-order at \$27.24. If the trade executes, how much money do you receive from the buyer?
A. \$2,722.00
B. \$2,724.00
C. \$2,725.00
D. \$5,446.00

29. Selling Stock with a Limit Order You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are \$96.24 and \$96.17, respectively. You place a limit sell-order at \$96.20. If the trade executes, how much money do you receive from the buyer?
A. \$38,464.00
B. \$38,468.00
C. \$38,480.00
D. \$38,496.00

30. Value of a Preferred Stock If a preferred stock from Pfizer Inc. (PFE) pays \$3.00 in annual dividends, and the required return on the preferred stock is 7 percent, what’s the value of the stock?
A. \$0.21
B. \$0.43
C. \$21.00
D. \$42.86

31. Value of a Preferred Stock If a preferred stock from Ecology and Environment, Inc. (EEI) pays \$2.50 in annual dividends, and the required return on the preferred stock is 5.8 percent, what’s the value of the stock?
A. \$0.15
B. \$0.43
C. \$14.50
D. \$43.10

32. P/E Ratio and Stock Price International Business Machines (IBM) has earnings per share of \$6.85 and a P/E ratio of 15.19. What is the stock price?
A. \$0.45
B. \$2.22
C. \$45.09
D. \$104.05

33. P/E Ratio and Stock Price Pfizer, Inc. (PFE) has earnings per share of \$2.09 and a P/E ratio of 11.02. What is the stock price?
A. \$0.19
B. \$5.27
C. \$18.97
D. \$23.03

34. P/E Ratio and Stock Price Ralph Lauren (RL) has earnings per share of \$3.85 and a P/E ratio of 17.37. What is the stock price?
A. \$0.22
B. \$4.51
C. \$22.16
D. \$66.87

35. Value of Dividends and Future Price A firm is expected to pay a dividend of \$2.00 next year and \$2.14 the following year. Financial analysts believe the stock will be at their target price of \$75.00 in two years. Compute the value of this stock with a required return of 10 percent.
A. \$65.40
B. \$66.67
C. \$65.57
D. \$79.14

36. Value of Dividends and Future Price A firm is expected to pay a dividend of \$3.00 next year and \$3.21 the following year. Financial analysts believe the stock will be at their target price of \$80.00 in two years. Compute the value of this stock with a required return of 13 percent.
A. \$50.00
B. \$67.52
C. \$67.82
D. \$86.21

37. Dividend Growth Annual dividends of Wal-Mart Stores (WMT) grew from \$0.23 in 2000 to \$0.83 in 2007. What was the annual growth rate?
A. 2.61%
B. 20.12%
C. 37.29%
D. 260.87%

38. Dividend Growth Annual dividends of Pfizer, Inc. (PFE) grew from \$0.38 in 2000 to \$1.15 in 2007. What was the annual growth rate?
A. 2.02%
B. 17.14%
C. 28.95%
D. 202.63%

39. Value a Constant Growth Stock Financial analysts forecast Best Buy Company (BBY) growth for the future to be 13 percent. Their recent dividend was \$0.49. What is the value of their stock when the required rate of return is 14.13 percent?
A. \$3.92
B. \$4.90
C. \$43.36
D. \$49.00

40. Value a Constant Growth Stock Financial analysts forecast Target Corp (TGT) growth for the future to be 11 percent. Their recent dividend was \$0.52. What is the value of their stock when the required rate of return is 11.89 percent?
A. \$5.25
B. \$6.48
C. \$58.43
D. \$64.85

41. Expected Return American Eagle Outfitters (AEO) recently paid a \$0.38 dividend. The dividend is expected to grow at a 15.5 percent rate. At the current stock price of \$24.07, what is the return shareholders are expecting?
A. 15.50%
B. 15.52%
C. 17.08%
D. 17.32%

42. Expected Return The Buckle (BKE) recently paid a \$0.90 dividend. The dividend is expected to grow at a 19 percent rate. At the current stock price of \$43.17, what is the return shareholders are expecting?
A. 19.00%
B. 19.02%
C. 21.48%
D. 22.74%

43. Expected Return Home Depot (HD) recently paid a \$0.90 dividend. The dividend is expected to grow at a 17 percent rate. At the current stock price of \$33.08, what is the return shareholders are expecting?
A. 2.70%
B. 17.03%
C. 17.18%
D. 20.18%

44. Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of \$0.10 per share in 2 years. This dividend will grow at 11 percent indefinitely. Using a 13 percent discount rate, compute the value of this stock.
A. \$4.42
B. \$4.59
C. \$5.43
D. \$7.21

45. Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of \$0.15 per share in 3 years. This dividend will grow at 9 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock.
A. \$12.28
B. \$12.40
C. \$16.35
D. \$16.50

46. P/E Ratio Model and Future Price Walmart (WMT) recently earned a profit of \$3.13 per share and has a P/E ratio of 14.22. The dividend has been growing at a 12.5 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio declined to 10 in five years.
A. \$6.08, \$5.04 respectively
B. \$72.22, \$50.40 respectively
C. \$80.20, \$56.40 respectively
D. \$86.46, \$60.80 respectively

47. P/E Ratio Model and Future Price Target Corp (TGT) recently earned a profit of \$3.57 earnings per share and has a P/E ratio of 17.3. The dividend has been growing at a 14 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 23 in five years.
A. \$118.85, \$158.01 respectively
B. \$137.19, \$182.39 respectively
C. \$173.87, \$231.15 respectively
D. \$308.81, \$410.55 respectively

48. Value of Future Cash Flows A firm recently paid a \$1.00 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be \$100. If the required rate for this stock is 14 percent, what is its value?
A. \$25.00
B. \$36.60
C. \$62.87
D. \$72.30

49. Value of Future Cash Flows A firm recently paid a \$0.30 annual dividend. The dividend is expected to increase by 8 percent in each of the next four years. In the fourth year, the stock price is expected to be \$60. If the required rate for this stock is 10 percent, what is its value?
A. \$15.00
B. \$20.41
C. \$42.13
D. \$45.30

50. Constant Growth Stock Valuation Best Buy Co (BBY) paid a \$0.27 dividend per share in 2003, which grew to \$0.49 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent?
A. \$2.84
B. \$42.24
C. \$49.03
D. \$50.78

51. Constant Growth Stock Valuation Target Corp (TGT) paid a \$0.21 dividend per share in 2000, which grew to \$0.52 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 14.77 percent?
A. \$3.52
B. \$55.32
C. \$62.97
D. \$63.49

52. Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10 percent growth rate and a 14 percent required rate. The firm recently paid a \$1.00 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12 percent rate. How much should the stock price change (in dollars and percentage)?
A. \$25, 1%
B. \$25, 100%
C. \$28.50, 1.04%
D. \$28.50, 104%

53. Changes in Growth and Stock Valuation Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a \$0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change (in dollars and percentage)?
A. \$33.33, 67%
B. \$33.33, 198%
C. \$36.33, 67%
D. \$36.33, 206%

54. Variable Growth A fast growing firm recently paid a dividend of \$0.50 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 15 percent discount rate is appropriate for this stock, what is its value?
A. \$5.00
B. \$22.62
C. \$25.75
D. \$36.46

55. Variable Growth A fast growing firm recently paid a dividend of \$1.00 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 8 percent growth rate can be assumed. If a 10 percent discount rate is appropriate for this stock, what is its value?
A. \$12.50
B. \$75.93
C. \$83.13
D. \$120.24

56. P/E Model and Cash Flow Valuation Suppose that a firm’s recent earnings per share and dividends per share are \$3.00 and \$1.50, respectively. Both are expected to grow at 10 percent. However, the firm’s current P/E ratio of 20 seems high for this growth rate. The P/E ratio is expected to fall to 16 within five years. Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years. Then discount these cash flows using a 14 percent required rate.
A. \$31.68
B. \$40.15
C. \$46.89
D. \$60.00

57. P/E Model and Cash Flow Valuation Suppose that a firm’s recent earnings per share and dividends per share are \$2.50 and \$1.00, respectively. Both are expected to grow at 10 percent. However, the firm’s current P/E ratio of 22 seems high for this growth rate. The P/E ratio is expected to fall to 18 within five years. Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years. Then discount these cash flows using a 14 percent required rate.
A. \$37.51
B. \$37.64
C. \$42.14
D. \$72.47

58. At your discount brokerage firm, it costs \$9.95 per stock trade. How much money do you need to buy 200 shares of General Electric (GE), which trades at \$45.19?
A. \$9,038.00
B. \$4528.95
C. \$9,047.95
D. \$4,595.95

59. At your discount brokerage firm, it costs \$7.95 per stock trade. How much money do you receive after selling 250 shares of General Electric (GE), which trades at \$55.19?
A. \$14,037.95
B. \$11,958.55
C. \$12,174.95
D. \$13,789.55

60. A preferred stock from DLC pays \$3.00 in annual dividends. If the required return on the preferred stock is 9.3%, what is the value of the stock?
A. \$34.89
B. \$32.26
C. \$38.49
D. \$31.13

61. Ultra Petroleum (UPL) has earnings per share of \$1.75 and P/E of 42.56. What is the stock price?
A. \$74.48
B. \$76.68
C. \$85.68
D. \$112.98

62. JPM has earnings per share of \$3.75 and P/E of 47. What is the stock price?
A. \$174.08
B. \$176.25
C. \$185.95
D. \$112.98

63. A firm is expected to pay a dividend of \$2.00 next year and \$3.75 the following year. Financial analysts believe the stock will be at their price target of \$125.00 in two years. Compute the value of this stock with a required rate of return of 15%.
A. \$78.34
B. \$81.05
C. \$87.13
D. \$99.09

64. Financial analysts forecast ABC Inc. growth for the future to be 12%. ABC’s recent dividend was \$1.60. What is the value of ABC stock when the required return is 15%?
A. \$59.73
B. \$63.72
C. \$79.81
D. \$91.02

65. A fast growing firm recently paid a dividend of \$0.80 per share. The dividend is expected to increase at a rate of 30% rate for the next 4 years. Afterwards, a more stable 7% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?
A. \$60.48
B. \$60.18
C. \$61.34
D. \$73.86

66. A fast growing firm recently paid a dividend of \$1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?
A. \$33.54
B. \$37.99
C. \$39.37
D. \$42.03

67. A firm recently paid a \$0.50 annual dividend. The dividend is expected to increase by 10% in each of the next three years. In the third year, the stock price is expected to be \$110. If the required return is 15%, what is its value?
A. \$62.53
B. \$68.95
C. \$73.71
D. \$78.67

24. Selling Stock with Commissions At your full-service brokerage firm, it costs \$110 per stock trade. How much money do you receive after selling 100 shares of Time Warner, Inc. (TMX), which trades at \$22.62?
A. \$2,152.00
B. \$2,262.00
C. \$2,372.00
D. \$2,388.20

25. Selling Stock with Commissions At your full-service brokerage firm, it costs \$120 per stock trade. How much money do you receive after selling 200 shares of Ralph Lauren (RL), which trades at \$85.13?
A. \$16,546.00
B. \$16,906.00
C. \$17,026.00
D. \$17,146.00

26. Buying Stock with a Market Order You would like to buy shares of International Business Machines (IBM). The current bid and ask quotes are \$96.17 and \$96.24, respectively. You place a market buy-order for 100 shares that executes at these quoted prices. How much money did it cost to buy these shares?
A. \$7.00
B. \$9,617.00
C. \$9,624.00
D. \$19,241.00

27. Buying Stock with a Market Order You would like to buy shares of Nokia (NOK). The current bid and ask quotes are \$20.13 and \$20.15, respectively. You place a market buy-order for 300 shares that executes at these quoted prices. How much money did it cost to buy these shares?
A. \$6.00
B. \$6,039.00
C. \$6,045.00
D. \$12,084.00

28. Selling Stock with a Limit Order You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are \$27.22 and \$27.25, respectively. You place a limit sell-order at \$27.24. If the trade executes, how much money do you receive from the buyer?
A. \$2,722.00
B. \$2,724.00
C. \$2,725.00
D. \$5,446.00

29. Selling Stock with a Limit Order You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are \$96.24 and \$96.17, respectively. You place a limit sell-order at \$96.20. If the trade executes, how much money do you receive from the buyer?
A. \$38,464.00
B. \$38,468.00
C. \$38,480.00
D. \$38,496.00

30. Value of a Preferred Stock If a preferred stock from Pfizer Inc. (PFE) pays \$3.00 in annual dividends, and the required return on the preferred stock is 7 percent, what’s the value of the stock?
A. \$0.21
B. \$0.43
C. \$21.00
D. \$42.86

31. Value of a Preferred Stock If a preferred stock from Ecology and Environment, Inc. (EEI) pays \$2.50 in annual dividends, and the required return on the preferred stock is 5.8 percent, what’s the value of the stock?
A. \$0.15
B. \$0.43
C. \$14.50
D. \$43.10

32. P/E Ratio and Stock Price International Business Machines (IBM) has earnings per share of \$6.85 and a P/E ratio of 15.19. What is the stock price?
A. \$0.45
B. \$2.22
C. \$45.09
D. \$104.05

33. P/E Ratio and Stock Price Pfizer, Inc. (PFE) has earnings per share of \$2.09 and a P/E ratio of 11.02. What is the stock price?
A. \$0.19
B. \$5.27
C. \$18.97
D. \$23.03

34. P/E Ratio and Stock Price Ralph Lauren (RL) has earnings per share of \$3.85 and a P/E ratio of 17.37. What is the stock price?
A. \$0.22
B. \$4.51
C. \$22.16
D. \$66.87

35. Value of Dividends and Future Price A firm is expected to pay a dividend of \$2.00 next year and \$2.14 the following year. Financial analysts believe the stock will be at their target price of \$75.00 in two years. Compute the value of this stock with a required return of 10 percent.
A. \$65.40
B. \$66.67
C. \$65.57
D. \$79.14

36. Value of Dividends and Future Price A firm is expected to pay a dividend of \$3.00 next year and \$3.21 the following year. Financial analysts believe the stock will be at their target price of \$80.00 in two years. Compute the value of this stock with a required return of 13 percent.
A. \$50.00
B. \$67.52
C. \$67.82
D. \$86.21

37. Dividend Growth Annual dividends of Wal-Mart Stores (WMT) grew from \$0.23 in 2000 to \$0.83 in 2007. What was the annual growth rate?
A. 2.61%
B. 20.12%
C. 37.29%
D. 260.87%

38. Dividend Growth Annual dividends of Pfizer, Inc. (PFE) grew from \$0.38 in 2000 to \$1.15 in 2007. What was the annual growth rate?
A. 2.02%
B. 17.14%
C. 28.95%
D. 202.63%

39. Value a Constant Growth Stock Financial analysts forecast Best Buy Company (BBY) growth for the future to be 13 percent. Their recent dividend was \$0.49. What is the value of their stock when the required rate of return is 14.13 percent?
A. \$3.92
B. \$4.90
C. \$43.36
D. \$49.00

40. Value a Constant Growth Stock Financial analysts forecast Target Corp (TGT) growth for the future to be 11 percent. Their recent dividend was \$0.52. What is the value of their stock when the required rate of return is 11.89 percent?
A. \$5.25
B. \$6.48
C. \$58.43
D. \$64.85

41. Expected Return American Eagle Outfitters (AEO) recently paid a \$0.38 dividend. The dividend is expected to grow at a 15.5 percent rate. At the current stock price of \$24.07, what is the return shareholders are expecting?
A. 15.50%
B. 15.52%
C. 17.08%
D. 17.32%

42. Expected Return The Buckle (BKE) recently paid a \$0.90 dividend. The dividend is expected to grow at a 19 percent rate. At the current stock price of \$43.17, what is the return shareholders are expecting?
A. 19.00%
B. 19.02%
C. 21.48%
D. 22.74%

43. Expected Return Home Depot (HD) recently paid a \$0.90 dividend. The dividend is expected to grow at a 17 percent rate. At the current stock price of \$33.08, what is the return shareholders are expecting?
A. 2.70%
B. 17.03%
C. 17.18%
D. 20.18%

44. Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of \$0.10 per share in 2 years. This dividend will grow at 11 percent indefinitely. Using a 13 percent discount rate, compute the value of this stock.
A. \$4.42
B. \$4.59
C. \$5.43
D. \$7.21

45. Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of \$0.15 per share in 3 years. This dividend will grow at 9 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock.
A. \$12.28
B. \$12.40
C. \$16.35
D. \$16.50

46. P/E Ratio Model and Future Price Walmart (WMT) recently earned a profit of \$3.13 per share and has a P/E ratio of 14.22. The dividend has been growing at a 12.5 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio declined to 10 in five years.
A. \$6.08, \$5.04 respectively
B. \$72.22, \$50.40 respectively
C. \$80.20, \$56.40 respectively
D. \$86.46, \$60.80 respectively

47. P/E Ratio Model and Future Price Target Corp (TGT) recently earned a profit of \$3.57 earnings per share and has a P/E ratio of 17.3. The dividend has been growing at a 14 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 23 in five years.
A. \$118.85, \$158.01 respectively
B. \$137.19, \$182.39 respectively
C. \$173.87, \$231.15 respectively
D. \$308.81, \$410.55 respectively

48. Value of Future Cash Flows A firm recently paid a \$1.00 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be \$100. If the required rate for this stock is 14 percent, what is its value?
A. \$25.00
B. \$36.60
C. \$62.87
D. \$72.30

49. Value of Future Cash Flows A firm recently paid a \$0.30 annual dividend. The dividend is expected to increase by 8 percent in each of the next four years. In the fourth year, the stock price is expected to be \$60. If the required rate for this stock is 10 percent, what is its value?
A. \$15.00
B. \$20.41
C. \$42.13
D. \$45.30

50. Constant Growth Stock Valuation Best Buy Co (BBY) paid a \$0.27 dividend per share in 2003, which grew to \$0.49 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent?
A. \$2.84
B. \$42.24
C. \$49.03
D. \$50.78

51. Constant Growth Stock Valuation Target Corp (TGT) paid a \$0.21 dividend per share in 2000, which grew to \$0.52 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 14.77 percent?
A. \$3.52
B. \$55.32
C. \$62.97
D. \$63.49

52. Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10 percent growth rate and a 14 percent required rate. The firm recently paid a \$1.00 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12 percent rate. How much should the stock price change (in dollars and percentage)?
A. \$25, 1%
B. \$25, 100%
C. \$28.50, 1.04%
D. \$28.50, 104%

53. Changes in Growth and Stock Valuation Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a \$0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change (in dollars and percentage)?
A. \$33.33, 67%
B. \$33.33, 198%
C. \$36.33, 67%
D. \$36.33, 206%

54. Variable Growth A fast growing firm recently paid a dividend of \$0.50 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 15 percent discount rate is appropriate for this stock, what is its value?
A. \$5.00
B. \$22.62
C. \$25.75
D. \$36.46

55. Variable Growth A fast growing firm recently paid a dividend of \$1.00 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 8 percent growth rate can be assumed. If a 10 percent discount rate is appropriate for this stock, what is its value?
A. \$12.50
B. \$75.93
C. \$83.13
D. \$120.24

56. P/E Model and Cash Flow Valuation Suppose that a firm’s recent earnings per share and dividends per share are \$3.00 and \$1.50, respectively. Both are expected to grow at 10 percent. However, the firm’s current P/E ratio of 20 seems high for this growth rate. The P/E ratio is expected to fall to 16 within five years. Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years. Then discount these cash flows using a 14 percent required rate.
A. \$31.68
B. \$40.15
C. \$46.89
D. \$60.00

57. P/E Model and Cash Flow Valuation Suppose that a firm’s recent earnings per share and dividends per share are \$2.50 and \$1.00, respectively. Both are expected to grow at 10 percent. However, the firm’s current P/E ratio of 22 seems high for this growth rate. The P/E ratio is expected to fall to 18 within five years. Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years. Then discount these cash flows using a 14 percent required rate.
A. \$37.51
B. \$37.64
C. \$42.14
D. \$72.47

58. At your discount brokerage firm, it costs \$9.95 per stock trade. How much money do you need to buy 200 shares of General Electric (GE), which trades at \$45.19?
A. \$9,038.00
B. \$4528.95
C. \$9,047.95
D. \$4,595.95

59. At your discount brokerage firm, it costs \$7.95 per stock trade. How much money do you receive after selling 250 shares of General Electric (GE), which trades at \$55.19?
A. \$14,037.95
B. \$11,958.55
C. \$12,174.95
D. \$13,789.55

60. A preferred stock from DLC pays \$3.00 in annual dividends. If the required return on the preferred stock is 9.3%, what is the value of the stock?
A. \$34.89
B. \$32.26
C. \$38.49
D. \$31.13

61. Ultra Petroleum (UPL) has earnings per share of \$1.75 and P/E of 42.56. What is the stock price?
A. \$74.48
B. \$76.68
C. \$85.68
D. \$112.98

62. JPM has earnings per share of \$3.75 and P/E of 47. What is the stock price?
A. \$174.08
B. \$176.25
C. \$185.95
D. \$112.98

63. A firm is expected to pay a dividend of \$2.00 next year and \$3.75 the following year. Financial analysts believe the stock will be at their price target of \$125.00 in two years. Compute the value of this stock with a required rate of return of 15%.
A. \$78.34
B. \$81.05
C. \$87.13
D. \$99.09

64. Financial analysts forecast ABC Inc. growth for the future to be 12%. ABC’s recent dividend was \$1.60. What is the value of ABC stock when the required return is 15%?
A. \$59.73
B. \$63.72
C. \$79.81
D. \$91.02

65. A fast growing firm recently paid a dividend of \$0.80 per share. The dividend is expected to increase at a rate of 30% rate for the next 4 years. Afterwards, a more stable 7% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?
A. \$60.48
B. \$60.18
C. \$61.34
D. \$73.86

66. A fast growing firm recently paid a dividend of \$1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?
A. \$33.54
B. \$37.99
C. \$39.37
D. \$42.03

67. A firm recently paid a \$0.50 annual dividend. The dividend is expected to increase by 10% in each of the next three years. In the third year, the stock price is expected to be \$110. If the required return is 15%, what is its value?
A. \$62.53
B. \$68.95
C. \$73.71
D. \$78.67

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