rate of return (Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per...

Question

Question

(Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per share. The companys executive

rate of return

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Answer a.

Current Price, P0 = $21.50
Expected Dividend, D1 = $1.25
Growth Rate, g = 8.90%

Expected Return = D1 / P0 + g
Expected Return = $1.25 / $21.50 + 0.0890
Expected Return = 0.0581 + 0.0890
Expected Return = 0.1471 or 14.71%

Answer b.

If your required return is 17%, then you should not purchase this stock as expected return is higher than the required return.

Add a comment

Answer 2

Similar Homework Help Questions

Question Help (Common stockholder expected return) Bennett, Inc. common stock currently sells for $ 20.25 20.25...

Question Help (Common stockholder expected return) Bennett, Inc. common stock currently sells for $ 20.25 20.25 per share. The company's executives anticipate a constant growth rate of 9.4 9.4 percent and an end-of-year dividend of $ 1.25 1.25. a. What is your expected rate of return if you buy the stock for $ 20.25 20.25? b. If you require a return of 18 18 percent, should you purchase the stock?
(Common stockholder expected return) Ziercher executives anticipate a growth rate of 11 11 percent for the...

(Common stockholder expected return) Ziercher executives anticipate a growth rate of 11 11 percent for the company's common stock. The stock is currently selling for $ 38.95 38.95 per share and pays an end-of-year dividend of $ 2.19 2.19. What is your expected rate of return if you purchase the stock for its current market price of $ 38.95 38.95?
expected rate of return Probiert 6-33 Sifat 10) (Common stockholder expected return) Ziercher executives anticipate...

expected rate of return Probiert 6-33 Sifat 10) (Common stockholder expected return) Ziercher executives anticipate a growth rate of 11 percent for the company's common stock. The stock is currently selling for S41.38 per share and pays an end-of-year dividend of $1.36. What is your expected rate of return if you purchase the stock for its current market price of $41 38? Your expected rate of return is_%. (Round to two decimal places.)

please show work Jordan, Inc.'s common stock currently sells for $35 per share. The company's executives...

please show work Jordan, Inc.'s common stock currently sells for $35 per share. The company's executives anticipate a constant growth rate of 6% and an end of year dividend of $2.50. What is the expected return?
(Preferred stockholder expected return) You own 150 shares of Dalton Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 150 shares of Dalton Resources preferred stock, which currently sells for $47.35 per share and pays annual dividends of $4.75 per share. a. What is your expected return? 10.03 % b. If you require a return of 7 percent, given the current price, should you sell or buy more stock? If you require a return of percent, the value of the stock for you is $ 67.86. (round to the nearest cent.) Because the...
Preferred stockholder expected return) You own 100 shares of Shapard Resources preferred stock, which currently sells...

Preferred stockholder expected return) You own 100 shares of Shapard Resources preferred stock, which currently sells for $37 per share and pays annual dividends of $5.25 per share. a. What is your expected return? b. If you require a return of 11 percent, given the current price, should you sell or buy more stock? a. Your expected return is nothing percent. (Round to two decimal places.)b. If you require a return of 11 percent, the value of the stock for...

(Preferred stockholder expected return) You own 150 shares of Dalton Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 150 shares of Dalton Resources preferred stock, which currently sells for $ 46.55 per share and pays annual dividends of $ 2.75 per share. a. What is your expected return? b. If you require a return of 6 percent, given the current price, should you sell or buy more stock? a. Your expected return is ____ percent.(Round to two decimal places.) b. If you require a return of 6 percent, the value of the...
(Preferred stockholder expected return) You own 200 shares of Shapard Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 200 shares of Shapard Resources preferred stock, which currently sells for $38 per share and pays annual dividends of$4.50 per share. a. What is your expected return? b. If you require a return of 9 percent, given the current price, should you sell or buy more stock?
(Preferred stockholder expected return) You own 100 shares of Dalton Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 100 shares of Dalton Resources preferred stock, which currently sells for $46.06 per share and pays annual dividene of $3.25 per share. a. What is your expected return? b. If you require a return of7 percent, given the current price, should you sell or buy more stock? a. Your expected return is percent (Round to two decimal places) b. If you require a return of 7 percent, the value of the stock for you...

(Preferred stockholder expected retum) You own 300 shares of Dalton Resources preferred stock, which currently sells...

(Preferred stockholder expected retum) You own 300 shares of Dalton Resources preferred stock, which currently sells for $35.24 per share and pays annual dividends of $2.75 per share. a. What is your expected return? b. If you require a return of 11 percent, given the current price, should you sell or buy more stock? a. Your expected return is percent. (Round to two decimal places.)

rate of return (Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per...

Homework Answers

Add Answer to:
rate of return (Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per...

Post as a guest

Earn Coins

Question Help (Common stockholder expected return) Bennett, Inc. common stock currently sells for $ 20.25 20.25...

(Common stockholder expected return) Ziercher executives anticipate a growth rate of 11 11 percent for the...

expected rate of return Probiert 6-33 Sifat 10) (Common stockholder expected return) Ziercher executives anticipate...

please show work Jordan, Inc.'s common stock currently sells for $35 per share. The company's executives...

(Preferred stockholder expected return) You own 150 shares of Dalton Resources preferred stock, which currently sells...

Preferred stockholder expected return) You own 100 shares of Shapard Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 150 shares of Dalton Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 200 shares of Shapard Resources preferred stock, which currently sells...

(Preferred stockholder expected return) You own 100 shares of Dalton Resources preferred stock, which currently sells...

(Preferred stockholder expected retum) You own 300 shares of Dalton Resources preferred stock, which currently sells...

rate of return (Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per...

Homework Answers

Add Answer to: rate of return (Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per...

Post as a guest

Earn Coins

Add Answer to:
rate of return (Common stockholder expected return) Bennett, Ing. common stock currently sells for $21.50 per...