Suppose that you have a stock that expects to pay out 52.6% of its net income...
Suppose that you have a stock that expects to pay out 52.6% of its net income as dividends. You have used the CAPM to estimate the required return on equity for its stock as 16.2%. Based on this, one would assume that the firm should grow by __.__% next year. Round your answer to 2 decimal places.
Homework Answers
Growth Rate = (1 - Payout Ratio)(ROE)
Growth rate = (1 - 0.526)(0.162)
Growth Rate = 7.68%
So,
Growth Rate = 7.68%
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Suppose that you have a stock that expects to pay out 52.6% of
its net income...
firm growth in percent by next year Question 2 4 pts Suppose that you have a...
firm growth in percent by next year
Question 2 4 pts Suppose that you have a stock that expects to pay out 58.2% of its net income as dividends. You have used the CAPM to estimate the required return on equity for its stock as 18.4%. Based on this, one would assume that the firm should grow by % next year. Round your answer to 2 decimal places.
A company's stock recently paid a dividend of $4.02 and expects dividends to grow annually at...
A company's stock recently paid a dividend of $4.02 and expects dividends to grow annually at a rate of 6.2%. Based on the CAPM, the required return for this stock is estimated to be 13.0%. Based on this, the maximum that you would be willing to pay for the stock is $__.__. Round your answer to 2 decimal places.
maximum price willing to pay for stock Question 3 3 pts A company's stock recently paid...
maximum price willing to pay for stock
Question 3 3 pts A company's stock recently paid a dividend of $2.66 and expects dividends to grow annually at a rate of 8.8%. Based on the CAPM, the required return for this stock is estimated to be 12.9%. Based on this, the maximum that you would be willing to pay for the stock is $__. Round your answer to 2 decimal places.
1. Ivanhoe, Inc., management expects to pay no dividends for the next six years. It has...
1. Ivanhoe, Inc., management expects to pay no dividends for the next six years. It has projected a growth rate of 25 percent for the next seven years. After seven years, the firm will grow at a constant rate of 5 percent. Its first dividend, to be paid in year 7, will be $3.61. If the required rate of return is 17 percent, what is the stock worth today? (Round intermediate calculations and final answer to 2 decimal places, e.g....
Monark Corp. just paid an annual dividend of $1.50 and expects to pay dividend of $1.80...
Monark Corp. just paid an annual dividend of $1.50 and expects to pay dividend of $1.80 next year, $2.20 in two years, and $2.55 in three years. Subsequently, Monark expects dividends to grow at a rate consistent with its expected earnings retention/investment rate of 60% and its expected realized return on equity of 15%. The market requires a return of 12% on Monark stock. What is your best estimate of Monark's current stock price and stock price three years from...
10. Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the...
10.
Barton Industries estimates its cost of common equity by using
three approaches: the CAPM, the bond-yield-plus-risk-premium
approach, and the DCF model. Barton expects next year's annual
dividend, D1, to be $2.40 and it expects dividends to
grow at a constant rate gL = 5.7%. The firm's current
common stock price, P0, is $23.00. The current risk-free
rate, rRF, = 4.7%; the market risk premium,
RPM, = 6%, and the firm's stock has a current beta, b, =
1. Assume...
DFB, Inc. expects earnings next year of $5.01 per share, and it plans to pay a...
DFB, Inc. expects earnings next year of $5.01 per share, and it plans to pay a $3.42 dividend to shareholders (assume that is one year from now). DFB will retain $1.59 per share of its earnings to reinvest in new projects that have an expected return of 15.5% per year. Suppose DFB wil maintain the same idend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next...
DFB, Inc. expects earnings next year of $5.05 per share, and it plans to pay a...
DFB, Inc. expects earnings next year of $5.05 per share, and it plans to pay a $3.19 dividend to shareholders (assume that is one year from now). DFB will retain $1.86 per share of its earnings to reinvest in new projects that have an expected return of 14.2% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next...
DFB, Inc. expects earnings next year of $ 4.34 per share, and it plans to pay...
DFB, Inc. expects earnings next year of $ 4.34 per share, and it plans to pay a $ 2.38 dividend to shareholders (assume that is one year from now). DFB will retain $ 1.96 per share of its earnings to reinvest in new projects that have an expected return of 15.9 % per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of...
Halliford Corporation expects to have earnings this coming year of $ 2.991 per share. Halliford plans...
Halliford Corporation expects to have earnings this coming year of $ 2.991 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 51 % of its earnings. It will retain 19 % of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 27.8 % per year. Any earnings that are not retained will...
firm growth in percent by next year
Question 2 4 pts Suppose that you have a stock that expects to pay out 58.2% of its net income as dividends. You have used the CAPM to estimate the required return on equity for its stock as 18.4%. Based on this, one would assume that the firm should grow by % next year. Round your answer to 2 decimal places.
maximum price willing to pay for stock
Question 3 3 pts A company's stock recently paid a dividend of $2.66 and expects dividends to grow annually at a rate of 8.8%. Based on the CAPM, the required return for this stock is estimated to be 12.9%. Based on this, the maximum that you would be willing to pay for the stock is $__. Round your answer to 2 decimal places.
10.
Barton Industries estimates its cost of common equity by using
three approaches: the CAPM, the bond-yield-plus-risk-premium
approach, and the DCF model. Barton expects next year's annual
dividend, D1, to be $2.40 and it expects dividends to
grow at a constant rate gL = 5.7%. The firm's current
common stock price, P0, is $23.00. The current risk-free
rate, rRF, = 4.7%; the market risk premium,
RPM, = 6%, and the firm's stock has a current beta, b, =
1. Assume...
DFB, Inc. expects earnings next year of $5.01 per share, and it plans to pay a $3.42 dividend to shareholders (assume that is one year from now). DFB will retain $1.59 per share of its earnings to reinvest in new projects that have an expected return of 15.5% per year. Suppose DFB wil maintain the same idend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next...
DFB, Inc. expects earnings next year of $5.05 per share, and it plans to pay a $3.19 dividend to shareholders (assume that is one year from now). DFB will retain $1.86 per share of its earnings to reinvest in new projects that have an expected return of 14.2% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next...
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