Required rate of return is calculated as follows:-
=Expected dividend/P0+g
=(1.50*1.05)/42.50+5%
=8.71%
*Using the Constant-Growth Dividend DDM compute the Required Rate of Return for Company Y based on...
*Using the 2-Stage Dividend Discount Model (DDM) compute the intrinsic Value for Company X based on the following information: --Company X pays a current annual dividend of $1.25 and is expected to grow at 15% for the next two years and then at 5% thereafter. The required rate of return of Company X is 8%.
A firm pays a current dividend of $1, which is expected to grow at a rate of 9% indefinitely. If the current value of the firm's shares is $109, what is the required return applicable to the investment based on the constant-growth dividend discount model (DDM)? (Do not round intermediate calculations.) Reguired rate of retum 315
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....
According to constant growth DDM, the value of a stock increases as: a. the required rate of return decreases. b. the required rate of return increases. c. the dividend growth rate increases. d. both a and c are correct.
1.Golf World has a constant dividend growth rate of 10% and has just paid a dividend (D0) of $5.00. If the required rate of return is 15%, what will the stock sell for one year from now? A) $90.00 B) $95.50 C) $ 100.00 D) $121.00 2.The dividend yield on AAA’s common stock is 5%. The company just paid a $4 dividend (D0), which will be $4.40 next year. The dividend growth rate (g) is expected to remain constant at...
5. According to constant growth DDM, the value of a stock increases as: a. the required rate of return decreases. b. the required rate of return increases. c. the dividend growth rate increases. d. both a and c are correct.
Problem 9-12 Valuation of a constant growth stock Investors require a 15 % rate of return on Levine Company's stock (1.e.., rs 15 % ) . a. What is its value if the previous dividend was Do- $1.50 and investors 12% 7 Round your answers to two decimal places. expect dividends to grow at a constant annual rate of (1) -3%, (2) 0 % , ( 3) 26 , or ( 4) (1) O (2) $ (3) (4) $ O...
Valuation of a constant growth stock Investors require a 18% rate of return on Levine Company's stock (i.e., rs = 18%). What is its value if the previous dividend was D0 = $2.50 and investors expect dividends to grow at a constant annual rate of (1) -2%, (2) 0%, (3) 3%, or (4) 14%? Round your answers to two decimal places. (1) $ (2) $ (3) $ (4) $ Using data from part a, what would the Gordon (constant growth)...
Assume that SL is a constant growth company whose last dividend (D0), which was paid yesterday) was $4.00, and whose dividend is expected to grow indefinitely at a 4 percent rate. Assume the required rate of return for SL is 13%, (Different from your estimate of 1 above) What is the firm's expected dividend stream over the next 3 years? What is the firm's current stock price? What is the stock's expected value 1 year from now? What is the...
Compute the current price of a stock using the Discounted Dividend Model (DDM) if Required rate of investment/market capitalization rate (kc)=14% Dividend paid at year 1 (D1)= $32 Predicted stock price for next year (P1)= $120.00