Chapter 7 Stock Evaluation 1- A firm has an expected dividend next year of $1.20 per share, a zero growth rate of dividends, and a required return of 10 percent. The value of a share of the firm's common stock is? 2- Tiger Company has an expected dividend next year of $5.60 per share, a growth rate of dividends of 10 percent, and a required return of 20 percent. The value of a share of Tiger Company's common stock is? 3- A stock just paid a dividend of $1.50. The required rate of return is r= 10.1%, and the constant growth rate is g-4.0%. What is the current stock price? 4-2. Harley Davidson's dividend next year is expected to be $5 with a growth rate of 3% and a cost of capital of 9%. a. What should the current price of the stock? b. What would the price of the stock be 5 years from now? 5- What must be the growth rate of a stock that is selling for $50, has a cost of capital of 12%, and a current dividend of $2? 6- Joseph is considering purchasing the common stock of Shark Industries, a rapidly growing boat manufacturer. He finds that the firm's most recent (2009) annual dividend payment was $1.50 per share. Joseph estimates that these dividends will increase at a 10% annual rate, gl, over the next 3 years of the 3 years (2010, 2011, and 2012), because of the introduction of a hot new boat. At the end of the 3 years (at the end of 2012), he expected the firm's mature product line to result in a slowing of the dividend growth rate to 5% per year, g2, for the seeable future. Joseph's required return, r, is 15%. Estimate the value of Shark's common stock at the end of initial period 2009? (20 points)