ZuoTi.Pro
Question

Develop a current stock value for a firm that is expected to have low growth of...

Develop a current stock value for a firm that is expected to have low growth of 3% for 3 years, after which it will experience a constant-growth rate of 7%. Its required return is 14% and next year's dividend is expected to be $2.00.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Di=2 D2 = 2X1.03 - 2006 D3= 2.06% 1003 = 2.12 Dy = 2012 x1-03= 2.19 D5 = 2:19 x 1.07 - 2034 Terminal value (P4) = D5 g Re=14%

0 0
Add a comment
Know the answer?
Add Answer to:
Develop a current stock value for a firm that is expected to have low growth of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Firm A just paid $2.50 per share and the current stock price is $36.00.... 1. Firm...

    Firm A just paid $2.50 per share and the current stock price is $36.00.... 1. Firm A just paid $2.5 per share, and the current stock price on the market is $36.00. The beta of this stock is 1.2, and the risk-free rate is 2%. and the market return is 10%. You expect that the long term growth rate of this dividend would be 4%. What is the value of this stock? 2. From Bloomberg, you got the following information....

  • A company's stock pays an annual dividend that is expected to increase by 9% annually. The...

    A company's stock pays an annual dividend that is expected to increase by 9% annually. The stock commands a market rate of return of 12% and sells for $60.50 a share. What is the expected amount of the next dividend to be paid on the stock? Battery Co. will pay an annual dividend of $2.08 a share on its common stock next year. Last week, the company paid a dividend of $2.00 a share. The company adheres to a constant...

  • 1. A company is a fast growing technology company. The firm projects a rapid growth of...

    1. A company is a fast growing technology company. The firm projects a rapid growth of 40 percent for the next two years and then a growth rate of 20 percent for the following two years. After that, the firm expects a constant-growth rate of 12 percent. The firm expects to pay its first dividend of $1.25 a year from now. If your required rate of return on such stocks is 20 percent, what is the current price of the...

  • Non- constant growth A stock is expected to pay a dividend of $8 next year and...

    Non- constant growth A stock is expected to pay a dividend of $8 next year and this will increase by $2 for each of the following 3 years. after that, the company is expected to pay no dividends to its shareholders. if the required rate of return is 11% on this stock, what is the current stock price?

  • 4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the...

    4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the next three years growth then declines linearly over eight years to a stable rate of 6%. The required return on this stock is 10% and the current stock price of firm D is $50. Calculate the value using an appropriate model.

  • 1. The last dividend paid by Corporation was $1.00. Corporation’s growth rate is expected to be...

    1. The last dividend paid by Corporation was $1.00. Corporation’s growth rate is expected to be 5 percent forever. Corporation’s required rate of return on equity is 12 percent. What is the current price of Corporation’s common stock? 2.  Corporation has paid a $1.00 dividend every year on its preferred stock since its inception in 1967. Investors demand a 7 percent required return on the stock. What should Corporation’s stock trade for in the market? 3.  The last dividend paid by Corporation...

  • The common stock of a firm sells for $77.77 per share. The stock is expected to...

    The common stock of a firm sells for $77.77 per share. The stock is expected to pay $1.89 per share next year (current dividend plus next year's growth) when the annual dividend is distributed. The market rate of return on this stock is 7.32%. What is the market's expected future growth rate of the dividend? 2.43% 9.75% 7.32% 4.89%

  • Common stock value - Constant growth Use the constant growth model (Gordon growth model) to find...

    Common stock value - Constant growth Use the constant growth model (Gordon growth model) to find the value of the firm shown in the following Dividend expected next year $1.13 Dividend growth rate 7.5% Required return 13.3% The value of the firm's stock is

  • Stocks X has a price of $60, and the expected return for the stock is 15%,...

    Stocks X has a price of $60, and the expected return for the stock is 15%, with a constant growth rate in its dividend of 14%: Stock X’s next year's expected dividend is $0.55 Stock X’s next year's expected dividend is $0.60 Stock X’s next year's expected dividend is $0.65 Stock X’s next year's expected dividend is $0.70 Stock X’s next year's expected dividend

  • Final Exam questions and I'm not sure how to solve them. Please have step by step!...

    Final Exam questions and I'm not sure how to solve them. Please have step by step! Stock - Top Hat Questions 1. ABC Company is set to pay a $2.50 preferred dividend in perpetuity and the required rate of return is 10%. What would be the expected value of the stock using this method? (Round Up, No Decimal) a. $25 2. ABC Company is set to pay a $1.45 dividend during the next period and the required rate of return...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT