22. Bavarian Sausage just paid a $1.57 dividend. If the required return on the stock investment is 14% and the stock currently sells for $34.37 what is the implied dividend growth rate for this company? a. 9.02% b. 6.39% c. 12.68% d. 9.43% NARRBEGIN: Miller Juice Miller Juice Miller Juice is a young company that currently does not pay a dividend. The company retains all their earnings to finance their growth. However ten years from now the company is expected to start paying a $1.50 dividend. According to research reports the dividend should then grow by 5% annually forever. NARREND 23. If the required return on the stock investment is 13% what should be Miller’s stock price today? a. $19.69 b. $6.24 c. $15.62 d. $10.37 24. If the required return on the stock investment is 13% what should be Miller’s stock price five years from today? a. $11.50 b. $6.24 c. $19.69 d. $16.28 25. If the required return on the stock investment is 13% what should be Miller’s stock price immediately after the first dividend was paid? a. $6.24 b. $19.69 c. $16.28 d. $21.19 26. Which of the following investors can force a firm into bankruptcy court if the firm does not pay the expected cash flow to the investor? a. common equity investor b. preferred equity investor c. debt investor d. none of the above 27. Which of the following securities poses the greatest financial risk for the investor? a. common equity b. preferred equity c. debt d. convertible debt 28. MeFirst Corporation has a cumulative preferred share issue that is suppose to pay a quarterly dividend of $2. MeFirst failed to pay 3 consecutive dividends to investors and then managed to pay a common share dividend the very next quarter. How much cash must MeFirst have paid to each preferred share holder at that time? a. $2 per share b. $6 per share c. $8 per share d. $10 per share
