The current value of stock =Expected dividend/rate-growth
=(2.60*1.04)/(14%-4%)
=27.04
The stock is underpriced at $25
You are currently thinking about investing in a stock valued at $25 per share. The stock...
You are currently thinking about investing in a stock valued at $30 per share. The stock recently paid a dividend of $2.40 and its dividend is expected to grow at a rate of 6 percent for the foreseeable future. You normally require a return of 14 percent on stocks of similar risk. Is the stock overpriced, underpriced, or correctly priced? (Round answer to 2 decimal places, e.g. 52.75.) Current value of stock $ The stock is at $30.
You are currently thinking about investing in a stock valued at $25.00 per share. The stock recently paid a dividend of $2.25 and its dividend is expected to grow at a rate of 5 percent for the foreseeable future. You normally require a return of 14 percent on stocks of similar risk. What is the stock worth? Is the stock overpriced, underpriced, or correctly priced? $25, it is underpriced $26.25 it is overpriced $26.25 it is underpriced $25 it is...
Please Answer the following questions: 1. The required rate of return is 24.40 percent. Oriole Corp. has just paid a dividend of $3.12 and is expected to increase its dividend at a constant rate of 6.35 percent. What is the expected price of the stock three years from now? (Round answer to 2 decimal places, e.g. 15.20.) Expected Price ? 2. Thomas Taylor is interested in purchasing the common stock of Sandhill, Inc., which is currently priced at $39.99. The...
Rhea Kirby owns shares in Ryoko Corp. Currently, the market price of the stock is $36. 34. Management expects dividends to grow at a constant rate of 6 percent for the foreseeable future. Its last dividend was $3.25. Rhea' s required rate of return for such stocks is 16 percent. She wants to find out whether she should sell her shares or add to her holdings. $34.45, sell overpriced $32.5, buy underpriced $34.45, buy underpriced $32.5, sell overpriced You are...
3.The stock in Up-Towne Movers is selling for $47.20 per share. Investors have a required return of 9.8 percent and expect the dividends to grow at 4.1 percent indefinitely. What was the dividend the company just paid? 4.CDB stock is currently priced at $72. The company will pay a dividend of $4.25 next year and investors require a return of 10.4 percent on similar stocks. What is the dividend growth rate on this stock?
CDB stock is currently priced at $63. The company will pay a dividend of $4.81 next year and investors require a return of 11.1 percent on similar stocks. What is the dividend growth rate on this stock?
CDB stock is currently priced at $64. The company will pay a dividend of $3.93 next year and investors require a return of 9.9 percent on similar stocks. What is the dividend growth rate on this stock?
COST OF COMMON EQUITY. A firm's common stock currently sells for $25 per share. The firm recently paid a dividend of $2.40 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 3 percent per year. Calculate the firm's cost of retained earnings using the DCF approach.
CDB stock is currently priced at $78. The company will pay a dividend of $4.49 next year and investors require a return of 10.7 percent on similar stocks. What is the dividend growth rate on this stock? 5.04% 5.76% 4.70% 4.94% 4.61%
You are thinking of buying a stock priced at $107 per share. Assume that the risk free rate is about 4.3% and the market risk premium is 5.5%. If you think the stock will rise to $117 per share by the end of the year, at which time it will pay a $3.41 dividend, what beta would it need to have for this expectation to be consistent with the CAPM?