FIN 571 TUTOR Motivated Minds/fin571tutor.com FIN 571 TUTOR Motivated Minds/fin571tutor.com | Page 61

5. Siblings, Inc., is expected to maintain a constant 3.6 percent growth rate
in its dividends, indefinitely. The company has a dividend yield of 5.4
percent.
What is the required return on the company's stock? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Required return
%
5. (Set 2) The next dividend payment by ECY, Inc., will be $1.60 per share.
The dividends are anticipated to maintain a growth rate of 6 percent,
forever. The stock currently sells for $30 per share.
What is the required return? (Do not round intermediate calculations and
enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Q-6 (Set 1)
Ayden, Inc., has an issue of preferred stock outstanding that pays a
dividend of $6.75 every year, in perpetuity. This issue currently sells for $93
per share.
What is the required return? (Do not round intermediate calculations and
enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Q-6 (Set 2)
6. The Starr Co. just paid a dividend of $1.55 per share on its stock. The
dividends are expected to grow at a constant rate of 6 percent per year,
indefinitely. Investors require a return of 14 percent on the stock.
What is the current price? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
What will the price be in three years? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)