Suppose the same firm Amazon will distribute a $5 dividend next year. And you expect the dividend to grow at 5% for three years. Then the growth rate declined to 3% in the following three years. And finally, the growth rate will decline to 2% in all following years. You also calculated the expected return on Amazon would be 10%. What will be the price you are willing to pay to buy this stock now?

Suppose that you sell short 500 shares of Intel, currently selling for $40 per share. Your initial percentage margin is 60%. Assume you earn no interest on the funds in your margin account and Intel has paid no dividends. a. What will be your rate of return after one year if Intel stock is selling at $40? b. If the maintenance margin is 30%, how high can Intel's price rise before you get a margin call?

Prima Corporation's dividend per share next year is expected to be $3.02 and the firm expects dividends to grow at a rate of 5% per year for the foreseeable future. If you can earn 13% on similar-risk investments, what is the most you would be willing to pay per share? If you can earn only 10% on similar-risk investments, what is the most you would be willing to pay per share? Compare and contrast your findings, and explain the impact of changing risk on share value.

Integrated Potatoes Chips just paid a $1 per share dividend. You can expect to grow steadily at rate of 4% per year. What is the expected dividend in each of the next three years? If the discount rate is 12%, at what price will the stock sale? What is the expected stock price 3 years from now? If you buy stock and plan to sell it 3 years from now, what are your expected cask flows in years 1,2, & 3?

You have a positive opinion of GM stock, which is currently priced at $200 per share. You believe it will be valued at $250 per share in one year. You have $50,000 to invest. You want to make a percentage return of 37% in one year based on your prediction that the stock price will be $250 per share after one year. Margin borrowing has an interest rate of 10% per year. How much should you borrow from your broker?