Captured Photographs doesn't currently pay any dividends but is expected to start doing so in 4...

Question

Question

Captured Photographs doesnt currently pay any dividends but is expected to start doing so in 4 years. That is, Captured Phot

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Growth Rate = Retention Ratio * RoE

= (1-Payment Ratio) * 0.21

= (1 - 0.49) * 0.21

= 10.71 %

Value of Stock after 3 years = $\small \frac{D_{1}}{Rate of Return- Growth Rate }$

= 1.52/ ( 0.14 - 0.1071)

= $ 46.20

Value of Stock today = present Value of 46.20

= 46.20/ (1+0.14)³

= $31.18

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

Add a comment

Answer 2

Similar Homework Help Questions

Captured Photographs doesn't currently pay any dividends but is expected to start doing so in 4...

Captured Photographs doesn't currently pay any dividends but is expected to start doing so in 4 years. That is, Captured Photographs will go 3 more years without paying any dividends and then is expected to pay its first dividend (of $3.07 per share) in the fourth year. Once the company starts paying dividends, it's expected to continue to do so. The company is expected to have a dividend payout ratio of 37% and to maintain a return on equity of...
Consolidated Software doesn't currently pay any dividends but is expected to start doing so in 4...

Consolidated Software doesn't currently pay any dividends but is expected to start doing so in 4 years. That is, Consolidated will go 3 more years without paying any dividends and then is expected to pay its first dividend (of $2.78 per share) in the fourth year. Once the company starts paying dividends, it's expected to continue to do so. The company is expected to have a dividend payout ratio of 41% and to maintain a return on equity of 24%....
1.) Consolidated Software doesn't currently pay any dividends but is expected to start doing so in...

1.) Consolidated Software doesn't currently pay any dividends but is expected to start doing so in 4 years. That is, Consolidated will go 3 more years without paying any dividends and then is expected to pay its first dividend (of $1.41 per share) in the fourth year. Once the company starts paying dividends, it's expected to continue to do so. The company is expected to have a dividend payout ratio of 41% and to maintain a return on equity of...

ABC Company is not expected to pay any dividends for the next 3 years. Beginning 4...

ABC Company is not expected to pay any dividends for the next 3 years. Beginning 4 years from today, investors expect to receive a dividend of $2 per share for 3 years and then a dividend of $3 per share for each of the next 4 years. Then dividends are expected to grow at 4% per year forever. If investors require a 15% return, what is the price per share? Do not use excel. Need to understand this writing out...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain...

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $2.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 45% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 5% per year. If the required return on the stock...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain...

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 55% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 8% per year. If the required return on the stock...

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain...

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 75% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 10% per year. If the required return on the stock...
Tesla is expected d to pay no dividends over the next 4 years pay a dividend...

Tesla is expected d to pay no dividends over the next 4 years pay a dividend of $5 at the end of year 5, and then grow the dividends by 6% each year afterwards. the required rate of return is 8% what should be the stock price today according to the two stage growth model?
Peterson packaging inc does not currently pay dividends the company will start paying 1.25 dividend at...

Peterson packaging inc does not currently pay dividends the company will start paying 1.25 dividend at the end of year 3 and grow it by 10% for 6 years after 6 years it will fix to 2.44 dividend forever if you want 15% return what should you pay for it today?

Peterson Packaging Inc. does not currently pay dividends. The company will start with a $1.00 dividend...

Peterson Packaging Inc. does not currently pay dividends. The company will start with a $1.00 dividend at the end of year three and grow it by 9% for each of the next six years. After six years of growth, it will fix its dividend at $1.84 forever. If you want a 15% return on this stock, what should you pay today given this future dividend stream? but the ses parties to analyse the end you to be even the man...

Captured Photographs doesn't currently pay any dividends but is expected to start doing so in 4...

Homework Answers

Add Answer to:
Captured Photographs doesn't currently pay any dividends but is expected to start doing so in 4...

Post as a guest

Earn Coins