Assignment 1

Firm

Dividend
expected next
year
$ 1.20
4.00
0.65
6.00
2.25

A
B
C
D
E
A.
1.20
= 1.20 = $24
.13-.08
.05

Dividend growth
rate

Required return

8%
5
10
8
8

13%
15
14
9
20

B.
4.00 = 4.00 =$40
.15-.05
.10
C.
0.65
.14-.10

= 0.65 = $16.25
.04

D.
6.00
.09-.08

= 6.00 = $600
.01

E.
2.25 = 2.25 = $18.75
.20-.08
.12
Assignment 2
5.00 = $31.25 (Price/Value when Purchased)
.16
5.00 = $41.67 (Price of stock when sold)
0.12
41.67-31.25 = $10.42 (Capital gain)
Given that Sally purchased 100 shares of Kesley class
100*$10.42 = $1042.00 (Sallys total capital gain)
Assignment 3