Dividend Next Year = D1 = $1.50
Rate of return = r = 8.50%
Growth rate = g = 6%
Using Dividend Growth model,
Price of the Stock = P0 = D1/(r - g) = 1.50/(0.0850 - 0.06) = $60
5. A Use the Dividend Growth Valuation Model to calculate the Inherent value of one share...
6. A Use the Dividend Growth Valuation Model to calculate the Inherent value of one share Procter and Gamble, assuming that dividends are held constant at $3.00, and you target a rate of return of 7.00% (1 point) 7. If the Risk Free Rate in Problem #6 is 2.50% and the Beta is 1.10 what is the Market Risk Premium? (1 point)
4. You manage a stock portfolio (made up of individual stocks) and you forecast the S&P 500 Index to increase over the next year In regards to the Beta on your stock portfolio, would you (circle the best answer, 1 Point); a. No Change. b. Lower the Beta. c. Increase the Beta 5. A Use the Dividend Growth Valuation Model to calculate the Inherent value of one share Pepsi. assuming that dividends grow at a constant rate of 6.00%, next...
Cost of New Equity – Dividend Valuation Model Next year dividends = $5 share Growth Rate = 8% Issue Price of stock = 60 per share. Floatation cost = $4 share Please calculate the cost of new equity using Dividend Valuation Model
Cost of retained earnings Dividend Valuation Model Next year dividends = $4 share Growth Rate = 10% Current Price = $45 per share. Please calculate the cost of retained earnings using Dividend Valuation Model.
One of the circumstances in which the Gordon growth valuation model for estimating the value of a share of stock should be used is ( A, the lack of data on dividend payments O B. declining dividends O C. an erratic dividend stream O D. a steady growth rate in dividends One of the circumstances in which the Gordon growth valuation model for estimating the value of a share of stock should be used is ( A, the lack of...
HW 08-Stocks and Their Valuation As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.16 per share. The...
QUESTION TWO (2) Gordon's Wealth Growth Model was initially developed by Gordon and Shapiro in 1950 and later refined by Gordon in 1962 based on the premise that dividends grow at a constant rate in perpetuity Nonetheless, this assumption does not hold in reality because projections of dividends cannot be made for an indefinite period, hence, Various versions of the dividend discount model have been developed These models were developed based on different assumptions concerning future growth The simplest form...
As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.68 per share. The company expects the coming year...
As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.68 per share. The company expects the coming year...
Nonconstant Dividend Growth Valuation A company currently pays a dividend of $1.8 per share (DO = $1.8). It is estimated that the company's dividend will grow at a rate of 22% per year for the next 2 years, and then at a constant rate of 7% thereafter. The company's stock has a beta of 1.1, the risk- free rate is 9%, and the market risk premium is 5.5%. What is your estimate of the stock's current price? Do not round...