The constant growth valuation formula has dividends in the numerator. dividends are divided by the difference between the required return and dividend growth rate as follows: p0p0 = = d1rs−gd1rs−g1. which of the following statements is true? a. increasing dividends will always decrease the stock price, because the firm is depleting internal funding resources. b. increasing dividends will always increase the stock price. c. increasing dividends may not always increase the stock price, because less earnings may be invested back into the firm and that impedes growth.2. walter utilities is a dividend-paying company and is expected to pay an annual dividend of $0.85 at the end of the year. its dividend is expected to grow at a constant rate of 9.50% per year. if walter’s stock currently trades for $20.50 per share, then the expected rate of return on the stock is: a. 9.56%b. 13.65%c. 11.60%d. 17.75%3. walter’s dividend is expected to grow at a constant growth rate of 9.50% per year. what do you expect to happen to walter’s expected dividend yield in the future? a. it will increase. b. it will decrease. c. it will stay the same.

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Suppose that the world price of steel is $100 a ton, india does not trade internationally, and the equilibrium price of steel in india is $60 a ton. suppose that india now begins to trade internationally. the price of steel in india the quantity of steel produced in india a. does not change; does not change b. falls; increases c. falls; decreases d. rises; decreases e. rises; increases the quantity of steel bought by india india steel. a. increases; exports b. decreases; imports c. decreases; exports d. does not change; neither imports nor exports e. increases; imports

< back to assignment attempts: 1 1 keep the highest: 1 / 2 2. determining opportunity cost juanita is deciding whether to buy a suit that she wants, as well as where to buy it. three stores carry the same suit, but it is more convenient for juanita to get to some stores than others. for example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $102 for the suit: store travel time each way price of a suit (minutes) (dollars per suit) local department store 15 102 across town 30 88 neighboring city 60 65 juanita makes $42 an hour at work. she has to take time off work to purchase her suit, so each hour away from work costs her $42 in lost income. assume that returning to work takes juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. as you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. complete the following table by computing the opportunity cost of juanita's time and the total cost of shopping at each location. store opportunity cost of time price of a suit total cost (dollars) (dollars per suit) (dollars) local department store 102 across town 88 neighboring city 65 assume that juanita takes opportunity costs and the price of the suit into consideration when she shops. juanita will minimize the cost of the suit if she buys it from the . grade it now save & continue continue without saving