FIN 419 ASSIST Perfect Education/fin419assist.cofi FIN 419 ASSIST Perfect Education/fin419assist.cofi | Page 42

P7-1 (similar to)
Anderson Motors, Inc. has just set the company dividend policy at
$0.85 per year. The company plans to be in business forever. What
is the price of this stock if
a. an investor wants a return of 4%?
b. an investor wants a return of 7%?
c. an investor wants a return of 9%?
d. an investor wants a return of 16%?
e. an investor wants a return of 18%?
P7-2 (similar to)
Dietterich Electronics wants its shareholders to earn a return of 9%
on their investment in the company. At what price would the stock
need to be priced today if Dietterich Electronics had a
a. $0.40 constant annual dividend forever?
b. $1.10 constant annual dividend forever?
c. $1.60 constant annual dividend forever?
d. $2.90 constant annual dividend forever?
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FIN 419 Week 4 Team Assignment Problem Set (New)