Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years,...

Question

Question

Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years,...

Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years, including the last payment this month. Investors expect a brighter future for Bergman and now expect Bergman's dividend payout to be $2.10 for the end of the year and for the foreseeable future.

If the opportunity cost of capital is 12%, what is the intrinsic value of Bergman Corp.'s common stock?

What happens to the intrinsic price of the stock if the market interest rate falls?

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

value of common stock = annual dividend/cost of common stock

= 2.1/0.12

= 17.5

hence the answer is 17.5

price of stock increases when interest rate falls

Add a comment

Answer 2

Similar Homework Help Questions

Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years,...

Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years, including the last payment this month. Investors expect a brighter future for Bergman and now expect Bergman’s dividend payout to be $2.10 for the end of the year and for the foreseeable future. If the opportunity cost of capital is 12%, what is the intrinsic value of Bergman Corp.’s common stock? What happens to the intrinsic price of the stock if the market interest...
Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years,...

Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years, including the last payment this month. Investors expect a brighter future for Bergman and now expect Bergman's dividend payout to be $2.10 for the end of the year and for the foreseeable future. (8 pts) If the opportunity cost of capital is 12%, what is the intrinsic value of Bergman Corp. 's common stock? (2 pts) What happens to the price of the SOON...
7. Madonna Pen Corp. just paid a $1.50 per share dividend on its common stock. The...

7. Madonna Pen Corp. just paid a $1.50 per share dividend on its common stock. The company expects to be able to increase its dividend by an annual growth rate of 6% for the foreseeable future, what is the intrinsic value of the company's stock if investors demand a rate of return of 11967(4 points) Your Answer Intrinsic Value Supporting Calculations Required

Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share...

Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share dividend. The company is expected to increase its dividend by 20% per year for the next two years. After the second year, the dividend growth rate will be 5% per year for the next two years. After the 4th year, dividends are expected to grow at a constant rate of 3% into the foreseeable future. An analyst estimates that investors in the firm will require a 12% annual...
Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share...

Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share dividend. The company is expected to increase its dividend by 25% per year for the next two years. After the second year, the dividend growth rate will be 5% per year for the next two years. After the 4th year, dividends are expected to grow at a constant rate of 3% into the foreseeable future. An analyst estimates that investors in the firm will...
Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share...

Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share dividend. The company is expected to increase its dividend by 20% per year for the next two years. After the second year, the dividend growth rate will be 5% per year for the next two years. After the 4th year, dividends are expected to grow at a constant rate of 3% into the foreseeable future. An analyst estimates that investors in the firm will require a 12% annual...

Oconee Federal Financial Corporation has paid a constant annual dividend payment of $1.70 per share. Suppose...

Oconee Federal Financial Corporation has paid a constant annual dividend payment of $1.70 per share. Suppose that you expect that Oconee Federal Financial Corporation will continue to pay this constant dividend payment for the foreseeable future. (a) What is the most you would be willing to pay for a share of Virtusa Corporation if you have a required return of 12%? (b) Suppose that the board of directors of Oconee Federal Financial Corporation makes a surprise announcement that they plan...
Exercise 17.6 Panhandle Industries, Inc., currently pays an annual common stock dividend of $8.80 per share....

Exercise 17.6 Panhandle Industries, Inc., currently pays an annual common stock dividend of $8.80 per share. The company’s dividend has grown steadily over the past 10 years at 8 percent per year; this growth trend is expected to continue for the foreseeable future. The company’s present dividend payout ratio, also expected to continue, is 40 percent. In addition, the stock presently sells at eight times current earnings— that is, its “multiple” is 8. What is the company’s cost of equity...
1. Polomi's common stock just paid a dividend of $1.31 per share. And the dividend is...

1. Polomi's common stock just paid a dividend of $1.31 per share. And the dividend is expected to grow at a rate of 6.00% every year. Investors require a rate of return of 12.80% on Polomi's stock. a. Calculate the intrinsic value of Polomi's stock? (Round your answer to 2 decimal places.) Intrinsic value $ b. What should be the price of Polomi's stock 1 year from now if market expect its current market price reflects its intrinsic value? (Round...

Polomi's common stock just paid a dividend of $1.19 per share. And the dividend is expected...

Polomi's common stock just paid a dividend of $1.19 per share. And the dividend is expected to grow at a rate of 4.80% every year. Investors require a rate of return of 10.40% on Polomi's stock. a. Calculate the intrinsic value of Polomi's stock? (Round your answer to 2 decimal places.) Intrinsic value = ? b. What should be the price of Polomi's stock 1 year from now if market expect its current market price reflects its intrinsic value? (Round...

Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years,...

Homework Answers

Add Answer to:
Bergman Corp. has paid an annual dividend of $2.00 per share over the past seven years,...

Post as a guest

Earn Coins