Questions 1-3 Create an excel file and solve the following problems. 1. Firm ABC has a...
Questions 4-6 4. Firm Y currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of the firm's shares based on constant-growth DDM is $32.03, what is the required rate of return? 5. MM Corp, has an ROE of 16% and a plowback ratio of 50%. If the coming year's earnings are expected to be s per share, at what price will the stock sell? The market capitalization rate is 12%. 6....
The stock of Nogro Corporation is currently selling for $20 per share. Earnings per share in the coming year are expected to be $3. The company has a policy of paying out 40% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 15% rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using...
The stock of Nogro Corporation is currently selling for $23 per share. Earnings per share in the coming year are expected to be $3.30. The company has a policy of paying out 40% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 21% rate of return per year. This situation is expected to continue indefinitely a. Assuming the current market price of the stock reflects its intrinsic value as computed using...
The stock of Nogro Corporation is currently selling for $13 per share. Earnings per share in the coming year are expected to be $2.30. The company has a policy of paying out 25% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 17% rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using...
QUESTION 3 The risk-free rate of return is 8.0%, the expected rate of return on the market portfolio is 20%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 60% of its earnings in dividends, and the latest earnings announced were $10.50 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 20% per year on all reinvested earnings forever. Instructions What...
18. You want to earn a return of 10% on cach of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B A. (4 points) Using the constant-growth DDM, what are the intrinsic values of stock A and Stock B? B. (I point) Which stock has a higher intrinsic value? 19. Sanders, Inc....
The Fl Corporation's dividends per share are expected to grow indefinitely by 8% per year a. If this year's year-end dividend is $4.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? Current stock price b. If the expected earnings per share are $12.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) Value of ROE c. How much...
The FI Corporation’s dividends per share are expected to grow indefinitely by 8% per year. a. If this year’s year-end dividend is $4.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? b. If the expected earnings per share are $16.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) c. How much is the market paying per share...
The Fl Corporation's dividends per share are expected to grow indefinitely by 8% per year. a. If this year's year-end dividend is $3.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? b. If the expected earnings per share are $9.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) c. How much is the market paying per share...
1) An analyst gathered the following financial information about a firm: Estimated (next year’s) EPS $10 per share Dividend payout ratio 40% Required rate of return 12% Expected long-term growth rate of dividends 5% What is the analysts’ estimate of intrinsic value? Show work. 2) An analyst has made the following estimates for a stock: dividends over the next year $.60 long-term growth rate 13% Intrinsic value $24 per share The current price of the shares is $22. Assuming the...