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Business & Finance / Accounting

1. The risk-free rate is 1.53% and the market risk premium is 6.75%. A stock with a β of 0.88 just paid a dividend of $1.28. The dividend is expected to grow at 22.80% for three years and then grow at 4.10% forever. What is the value of the stock?

2.The risk-free rate is 3.67% and the market risk premium is 8.25%. A stock with a β of 1.09 just paid a dividend of $1.27. The dividend is expected to grow at 20.16% for five years and then grow at 4.53% forever. What is the value of the stock?

3.Caspian Sea Drinks needs to raise $54.00 million by issuing additional shares of stock. If the market estimates CSD will pay a dividend of $2.99 next year, which will grow at 3.29% forever and the cost of equity to be 10.28%, then how many shares of stock must CSD sell? 

4.Suppose the risk-free rate is 2.82% and an analyst assumes a market risk premium of 6.19%. Firm A just paid a dividend of $1.36 per share. The analyst estimates the β of Firm A to be 1.28 and estimates the dividend growth rate to be 4.73% forever. Firm A has 294.00 million shares outstanding. Firm B just paid a dividend of $1.71 per share. The analyst estimates the β of Firm B to be 0.87 and believes that dividends will grow at 2.65% forever. Firm B has 198.00 million shares outstanding. What is the value of Firm A?

5. Suppose the risk-free rate is 3.84% and an analyst assumes a market risk premium of 5.24%. Firm A just paid a dividend of $1.13 per share. The analyst estimates the β of Firm A to be 1.29 and estimates the dividend growth rate to be 4.13% forever. Firm A has 281.00 million shares outstanding. Firm B just paid a dividend of $1.67 per share. The analyst estimates the β of Firm B to be 0.84 and believes that dividends will grow at 2.80% forever. Firm B has 180.00 million shares outstanding. What is the value of Firm B?.

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