The common stock of Carter & Sons is selling for $29 a shareand has a 17 percent
ID: 2771046 • Letter: T
Question
The common stock of Carter & Sons is selling for $29 a shareand has a 17 percent rate of return. The growth rate of thedividends is 12 percent annually. What is the amount of the nextdividend?a. $1.38
b. $1.45
c. $1.52
d. $4.25
e. $4.34
Jon's Catering is growing at a very fast rate. As a result, thecompany expects to increase its dividend to $.45, $.95, $1.60, and$2.15 over the next four years, respectively. After that, thedividend is projected to increase by 6 percent annually. The lastannual dividend the firm paid was $.30 a share. What is the currentvalue of this stock if the required return is 17 percent?
a. $12.97
b. $13.13
c. $13.77
d. $14.28
e. $14.58
Explanation / Answer
The common stock of Carter & Sons is selling for $29 a shareand has a 17 percent rate of return. The growth rate of thedividends is 12 percent annually. What is the amount of the nextdividend? a. $1.38 b.$1.45 c.$1.52 d. $4.25 e. $4.34 Reason : 29 = D1 / (.17 - .12); D1 = 29 x .05 =1.45 DON'T FORGET TO RATE IF IT IS HELPFUL.