Boehm incorporated is expected to pay

Brushy Mountain Mining Company's ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 5% per year. If D0 = $3 and rs = 17%, what is the value of Brushy Mountain Mining's stock? Round your answer to the nearest cent.

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Boehm Incorporated is expected to pay a $1.70 per share dividend at the end of this year (i.e., D1 = $1.70). The dividend is expected to grow at a constant rate of 10% a year. The required rate of return on the stock, rs, is 18%. What is the value per share of the company's stock? Round your answer to the nearest cent.

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Investors require a 17% rate of return on Brooks Sisters' stock (rs = 17%).

a. What would the value of Brooks's stock be if the previous dividend was D0 = $3.75 and if investors expect dividends to grow at a constant compound annual rate of (1) - 2%, (2) 0%, (3) 5%, or (4) 13%? Round your answers to the nearest cent.

1. $

2. $

3. $

4. $

b. Using data from part a, what is the Gordon (constant growth) model's value for Brooks Sisters's stock if the required rate of return is 17% and the expected growth rate is (1) 17% or (2) 18%? Are these reasonable results? Explain.

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2.

Problem

A company currently pays a dividend of $3.5 per share, D0 = 3.5. It is estimated that the company's dividend will grow at a rate of 19% percent per year for the next 2 years, then the dividend will grow at a constant rate of 7% thereafter. The company's stock has a beta equal to 1.95, the risk-free rate is 6.5 percent, and the market risk premium is 5 percent. What is your estimate is the stock's current price? Round your answer to the nearest cent.

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