Question

Question 39

Carla Tire’s current dividend is $5.30. Dividends are expected to grow by 20 percent for years 1 to 3 and 10 percent thereafter. The required rate of return on the stock is 13 percent. What is Carla’s current stock price? (Round intermediate calculations to 4 decimal places, e.g. 7.1285 and final answer to 2 decimal places, e.g. 115.61.)

Stock price is

$

Question 34

Bridgeport Supplies Ltd. currently doesn’t pay any dividends but is expected to start paying dividends in five years. The first dividend is expected to be $1 and is expected to grow at 4.5 percent thereafter. The required rate of return for the firm is 9 percent. What is Bridgeport’s current stock price? (Round intermediate calculations to 3 decimal places, e.g. 20.417 and the final answer to 2 decimal places, e.g. 15.61.)

Stock price is

$

Question 35

Coronado Corporation has issued $1 million in preferred shares to investors with a 6.95 percent annual dividend rate on a par value of $100. Assuming the firm pays dividends indefinitely and the required rate is 9.5 percent, calculate the price of the preferred shares. (Round answer to 2 decimal places, e.g. 15.61.)

Preferred share price

$

Answer 1

39)

D Present value 5.63 B17 X fix =+816*1.1 A B C 13 PVIF @ 13% 14 01 $ 6.36 0.885 $ 15 D2 $ 7.63 0.783 $ 16 D3 $ 9.16 0.693 $ 17 04 10.07 18 Stock price in 3 years $ 335.81 0.693 $ 19 10.07/(13%-10%) 5.98 6.35 232.73 20 Current share price $ 250.68

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