Author Question: Prock Petroleums stock has a required return of 14%, and the stock sells for $68 per share. The firm ... (Read 86 times)

campbellfam07 · **on:** Aug 7, 2023

Question 1

Pink Canada Inc. (PCI) pays an annual dividend of $3.40 per share. If PCI’s stock is currently trading at $59 per share, and PCI’s expected growth rate is 9.8%, what is PCI’s expected return?

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15.03%

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15.60%

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15.80%

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16.21%

Question 2

Prock Petroleum’s stock has a required return of 14%, and the stock sells for $68 per share. The firm just paid a dividend of $1.50, and the dividend is expected to grow by 40% per year for the next 4 years, so D₄= $1.50(1.40)⁴= $5.7624. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock’s expected constant growth rate after t = 4; that is, what is X?

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7.39%

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7.64%

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7.85%

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8.10%

lola.jashay · **Reply #1 on:** Aug 7, 2023

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