30.Monet Industries currently does not pay a dividend but expects to pay a dividend of $1.70 next year Thereafter,the dividend is expected to grow at a rate of 5%per year.The risk-free rate is currently 6%and the expected return on the market portfolio is 12%.What is the price you would expect to pay for a share of Monet today if the beta for this stock is 1.05? (a)$12.50 (b)$13.13 (c)$23.29 (d$24.45 Answer:(c) 31.Joe Citizen is considering venturing into the sports utility vehicle field.As a result of such a venture, the beta would increase from 1.07 to 1.15 and the expected growth rate in earnings would increase from 10%to 12%.Determine whether this is a worthwhile venture if Joe also has the following information:the risk-free rate is 6%,the current dividend is $0.95,and the expected return on the market portfolio is 13%. (a)No,it is not worthwhile since there is no change in stock price (b)Yes,it is worthwhile since the stock price increases by $21.96 (c)Yes,it is worthwhile since the stock price increases by $29.94 (d)No,it is not worthwhile-stock price decreases by $19.12 Answer:(b) 32.Consider a share of Rooble Less.If it has a beta of 0.7,and we also know that the risk-free rate is 7%, and the expected return on the market portfolio is 15%,what is the required rate of return for a share of Rooble Less stock? (a)10.5% (b)11.9% (c)12.6% (d17.5% Answer:(c) 13-913-9 30. Monet Industries currently does not pay a dividend but expects to pay a dividend of $1.70 next year. Thereafter, the dividend is expected to grow at a rate of 5% per year. The risk-free rate is currently 6% and the expected return on the market portfolio is 12%. What is the price you would expect to pay for a share of Monet today if the beta for this stock is 1.05? (a) $12.50 (b) $13.13 (c) $23.29 (d) $24.45 Answer: (c) 31. Joe Citizen is considering venturing into the sports utility vehicle field. As a result of such a venture, the beta would increase from 1.07 to 1.15 and the expected growth rate in earnings would increase from 10% to 12%. Determine whether this is a worthwhile venture if Joe also has the following information: the risk-free rate is 6%, the current dividend is $0.95, and the expected return on the market portfolio is 13%. (a) No, it is not worthwhile since there is no change in stock price (b) Yes, it is worthwhile since the stock price increases by $21.96 (c) Yes, it is worthwhile since the stock price increases by $29.94 (d) No, it is not worthwhile - stock price decreases by $19.12 Answer: (b) 32. Consider a share of Rooble Less. If it has a beta of 0.7, and we also know that the risk-free rate is 7%, and the expected return on the market portfolio is 15%, what is the required rate of return for a share of Rooble Less stock? (a) 10.5% (b) 11.9% (c) 12.6% (d) 17.5% Answer: (c)