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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