ZuoTi.Pro
Question

What is the price of XYZ stock expected to be in 4 years if its annual...

What is the price of XYZ stock expected to be in 4 years if its annual dividend is expected to grow by 1.20 percent per year forever, the next dividend is expected in 1 year, the dividend is expected to be $5.60 in 4 years, and the expected return is 9.40 percent per year?

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

Homework Answers

Answer #1
Given,
Growth rate of dividend (g) 1.20%
Dividend in year 4 $5.60
Expected rate of return (Re) 9.40%
To find: Price in year 4
As per Gordon model,
P4=(D4*(1+g))/(Re-g)
(5.60*(1+0.012))/(0.094-0.012)
$69.11 (Answer)
0 0
Add a comment
Know the answer?
Add Answer to:
What is the price of XYZ stock expected to be in 4 years if its annual...
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

  • QUESTION 4 What is the price of XYZ stock expected to be in 4 years if...

    QUESTION 4 What is the price of XYZ stock expected to be in 4 years if its annual dividend is expected to grow by 1.20 percent per year forever, the next dividend is expected in 1 year, the dividend is expected to be 55.60 in 4 years, and the expected return is 9.40 percent per year? 568.29 (plus or minus $0.20) $69.11 (plus or minus 50,20) $71.63 (plus or minus 50.20) 559.57 (plus or minus 50.20) None of the above...

  • 36. What is the price of a stock expected to be in 4 years if the...

    36. What is the price of a stock expected to be in 4 years if the stock is expected to pay a dividend every year forever, the expected return for the stock is 15.61 percent per year, the next dividend is expected in 1 year, the next dividend is expected to be 8.21 dollars, and all subsequent dividends are expected to grow by 4.19 percent per year?

  • What is the price of Platinum Water Entertainment stock expected to be in 5 years if...

    What is the price of Platinum Water Entertainment stock expected to be in 5 years if its annual dividend is expected to grow by 6 percent per year forever, the next dividend is expected in 1 year, the dividend is expected to be 8.63 dollars in 5 years, and the expected return is 11.31 percent per year?

  • 37. What is the price of Yellow Sand Packaging stock expected to be in 3 years...

    37. What is the price of Yellow Sand Packaging stock expected to be in 3 years if its annual dividend is expected to grow by 6.64 percent per year forever, the next dividend is expected in 1 year, the dividend is expected to be 9.85 dollars in 3 years, and the expected return is 13.47 percent per year?

  • A stock is expected to pay annual dividends forever. The first dividend is expected in 1...

    A stock is expected to pay annual dividends forever. The first dividend is expected in 1 year and all subsequent annual dividends are expected to grow at a constant rate annually. The dividend expected in 2 years from today is 19.55 dollars and the dividend expected in 13 years from today is expected to be 30.03 dollars. What is the dividend expected to be in 8 years from today? Number If 1) the expected return for Litchfield Design stock is...

  • Problem1: The XYZ Co. just paid a dividend of $1.95 per share on its stock. The...

    Problem1: The XYZ Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 4% per year indefinitely. Assume investorsrequire a return of 10.5 % on the XYZ Co. stock. What will the price be in 3 years? Show yourwork/calculations Problem2: The ABCorp. paid an annual dividend of $1.37 a share last month. Today, the company announced that future dividends will be increasing by 2.8 percent annually. If...

  • XYZ owns one share of stock of ABC and one share of stock of CDE

    1. XYZ owns one share of stock of ABC and one share of stock of CDE. The total value of his holdings is 597.40. Both stocks pay annual dividends that are expected to continue forever. The expected return on ABC stock is 8.40 percent and its annual dividend is expected to remain at $4.40 forever. The expected return on CDE stock is 9.50 percent. The next dividend paid by CDE is expected to be $3.30 and all subsequent dividends are expected...

  • Find the price today of a young growth company's stock that is not expected to pay...

    Find the price today of a young growth company's stock that is not expected to pay any dividends for the next nine years, but ten years from now the stock is expected to pay a dividend of $4 per share and then grow this dividend by 3% per year forever. Investors expect a 10% annual return on this stock. Your Answer:

  • Oxygen Optimization stock is currently priced at 59.81 dollars per share. The stock is expected to...

    Oxygen Optimization stock is currently priced at 59.81 dollars per share. The stock is expected to pay annual dividends that are expected to grow by 2.27 percent per year forever starting after the next dividend is paid in 1 year. The expected return on the stock is 14.07 percent per year. What is the dividend expected to be in 8 years?

  • What is the price of Silver Sun Shipping stock expected to be in 2 years if...

    What is the price of Silver Sun Shipping stock expected to be in 2 years if it has an annual expected return of 9.52 percent, is expected to be priced at 74.48 dollars in 1 year, and is expected to pay an annual dividend of 2.68 dollars in 3 years and be priced at 85.36 dollars in 3 years? The stock is expected to pay annual dividends forever.

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