# 4. stock valuation | Business & Finance homework help

(i). Elves Corporation has just paid a dividend of \$1.25. Dividends are expected to grow at 15% for years 1-3, 30% for years 4-6, 10% for years 7-8, and 4% thereafter. What should the stock sell for today if the required return is 16 percent?

(ii) Mountain Co. is currently paying a dividend of \$2.20 per share. The dividends are expected to grow at 25% per year for the next four years and then grow 5% per year thereafter. The required rate of return is 10%. What is the expected price 5 years from today?

(iii). Macaroni Inc. announced that it would pay the following dividends over the next five years: \$0.50, \$0.75, \$1.50, \$3, and \$4. Afterwards, dividends will decline at a rate of 3 percent per year indefinitely. What is the firm’s current stock price if the required rate of return is 13%?

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