# Lashgari Company: A stock just paid a dividend of $1

6. A stock just paid a dividend of $1. The required rate of return is rs = 11%, and the constant growth rate is 5%. What is the current stock price?

$15.00

$17.50

$20.00

$22.50

$25.00

7. The Lashgari Company is expected to pay a dividend of $1 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5% per year in the future. The company's beta is 1.2, the market risk premium is 5%, and the risk-free rate is 3%. What is the company's current stock price?

$15.00

$20.00

$25.00

$30.00

$35.00

8. An increase in a firm's expected growth rate would normally cause its required rate of return to

Increase.

Decrease.

Fluctuate.

Remain constant.

Possibly increase, decrease, or have no effect.

9.Harrison Clothiers' stock currently sells for $20 a share. It just paid a dividend of $1.00 a share (that is D0 = $1.00). The dividend is expected to grow at a constant rate of 6 percent a year. What stock price is expected 1 year from now? What is the required rate of return?

10. A stock is expected to pay a dividend of $0.50 at the end of the year (that is, D1 = 0.50), and it should continue to grow at a constant rate of 7 percent a year. If its required return is 12 percent, what is the stock's expected price 4 years from today?

© BrainMass Inc. brainmass.com June 3, 2020, 10:16 pm ad1c9bdddfhttps://brainmass.com/business/beta-and-required-return-of-a-project/lashgari-company-a-stock-just-paid-a-dividend-of-1-223114

#### Solution Preview

6. A stock just paid a dividend of $1. The required rate of return is rs = 11%, and the constant growth rate is 5%. What is the current stock price?

$15.00

$17.50

$20.00

$22.50

$25.00

Answer: $17.50

P = (1 + 5%)/(11% - 5%) = 17.50

7. The Lashgari Company is expected to pay a dividend of $1 per share at the end of the year, and that dividend is expected to grow at a ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer what is the current stock price.