Tina's Medical Equipment Company paid 2.25 common stock dividend ...

[Kikoku]

Tina's Medical Equipment Company paid 2.25 common stock dividend last year. The company's policy is to allow its dividend to grow at 5 percent per year indefinitely. What is the value of the stock if the required rate of return is 8 percent?
 
  What will be an ideal response?

Question 2

In the development of pro forma statements, a firm that requires external funds means that its projected level of cash is in excess of its needs and that funds would therefore be available for repaying debt, repurchasing stock, or increasing the
 
  dividend to stockholders.
  Indicate whether the statement is true or false

[poopface]

Answer to Question 1

P = D1 / (r - g) = 2.25  (1 + 0.05 ) / (0.08 - 0.05 ) = 78.75

Answer to Question 2

FALSE

[Kikoku]

Thank you

[poopface]

No problemo