Question.4395 - Ch. 11 Written AssignmentDetailsResolve the following problems (2, 3, 5, 6, and 9 from the book chapter). Show the calculations.2 . Let’s say you want to purchase shares of Fontaine Ltd. and then hold this stock for six years. The company has a stated dividend policy of $2.00 annually per share for the next six years, at the end of which time you will sell the stock. You expect to be able to sell the stock for $35.00 at that time. If you want to earn an 8% return on this investment, what price should you pay today for this stock?3 . Damian Painting Systems has established a dividend policy of $3.00 per share per year. If the company plans to be in business forever, what is the value of this stock if an investor wants a 10% return?5 . Dax Industrial Systems has stock currently priced at $50.00 per share. If investors are earning a 7% return on Dax Industrial, what is the company’s annual dividend payment per share?6 . If a stock is selling at $400 with a current dividend of $40 and a potential investor’s required rate of return is 15%, what would be the anticipated dividend growth rate?9 . The Kirkson Distributors common stock is currently selling at $52.00 per share, pays dividends annually at $2.50 per share, and has an annual dividend growth rate of 2%. What is the required return?
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