Assume there are three companies that in the past year paid exactly the same annual dividend of $2.41 a share. In addition, the future annual rate of growth in dividends for each of the three companies has been estimated as follows: . Assume also that as the result of a strange set of circumstances, these three companies all have the same required rate of return (r= 12%). a. Use the appropriate DVM to value each of these companies. b. Comment briefly on the comparative values of these three companies. What is the major cause of the differences among these three valuations? a. For Buggies-Are-Us, the value of the company's common shares is $ (Round to the nearest cent.)

Suppose that a firm's recent earnings per share and dividend per share are $2.55 and $1.40, respectively. Both are expected to grow at 11 percent. However, the firm's current P/E ratio of 15 seems high for this growth rate. The P/E ratio is expected to fall to 11 within five years. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.) Years First year Second year Third year Fourth year Fifth year Dividends

Collins Inc. has just paid its annual dividend of $2.2. The company expects that its dividends in the first three years will be $1.9, $2.3, and $2.7, respectively. The company estimates an EPS in year three to be $5.6 , the EPS in year four to be $6.0, and the median leading industry P/E in year three to be 20. Calculate Collins Inc. current value if the cost of equity is 14%.

1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported revenue was $10 million and the reported cost was $9 million. The discount rate is 8%. Mark ALL the CORRECT statements. For this question, profit = revenue - cost. Hint: Apply the Gordon Formula to the profits of the firm. a) If the profit is expected to be constant, the present value of all the company's future profits is $125 million. b) If the profit is expected to grow 3% annually, the present value of all the company's future profits is $20 million. c) If the profit is expected to grow 4% annually, the present value of all the company's future profits is $25.75 million. d) If the profit is expected to grow 6% annually, the present value of all the company's future profits is $50 million. e) If the profit is expected to grow 10% annually, the present value of all the company's future profits is negative.