Watch the following video (you can stop around the 26 minute mark unless you are fascinated by the topic and want to learn more).

Watch the following video (you can stop around the 26 minute mark unless you are fascinated by the topic and want to learn more).
https://analystprep.com/cfa-level-1-exam/equity/price-multiples/ (Links to an external site.)
Answer the following questions:
1. A firm pays a current dividend of $1.25. The firm’s earnings are $3.20 per share and the firm’s ROE is 9.1%. This firm has a required return on equity of 11.9%. Compute the price of this share of common stock.
2. A firm is expected to have super high growth during the next three years because of a patent. The board expects to pay a $2.35 dividend exactly one year from today and those dividends should double during the subsequent two-year period. Normal growth rates apply after the high growth period of 4.1%. This firm has a required return on equity of 13.4%. Compute the price of this share of common stock.
3. Read the following article and any others you might find:
https://www.globenewswire.com/news-release/2020/10/21/2112253/0/en/Armstrong-World-Industries-Declares-Increased-Cash-Dividend-for-Third-Quarter-2020.html (Links to an external site.)
Offer your opinion on this dividend announcement and relate the decision to capital budgeting decisions and the quality of the firm’s assets.

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