ZuoTi.Pro
Question

32. Spring Break, Inc. just paid an annual dividend (DC) of $2.00 per share on earnings of $3.00. You expect the firms divid

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

Homework Answers

Answer #1

1.
=risk free rate+beta*market risk premium
=4%+1.1*5%
=9.5%

2.
=2*1.25/1.095+2*1.25^2/1.095^2
=4.88939

3.
=2*1.25^2/1.095^2*1.06/(9.5%-6%)
=78.93318

4.
=4.88939+78.93318
=83.82257

0 0
Add a comment
Know the answer?
Add Answer to:
32. Spring Break, Inc. just paid an annual dividend (DC) of $2.00 per share on earnings...
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

  • Polomi's common stock just paid a dividend of $1.19 per share. And the dividend is expected...

    Polomi's common stock just paid a dividend of $1.19 per share. And the dividend is expected to grow at a rate of 4.80% every year. Investors require a rate of return of 10.40% on Polomi's stock. a. Calculate the intrinsic value of Polomi's stock? (Round your answer to 2 decimal places.) Intrinsic value = ? b. What should be the price of Polomi's stock 1 year from now if market expect its current market price reflects its intrinsic value? (Round...

  • 1. Polomi's common stock just paid a dividend of $1.31 per share. And the dividend is...

    1. Polomi's common stock just paid a dividend of $1.31 per share. And the dividend is expected to grow at a rate of 6.00% every year. Investors require a rate of return of 12.80% on Polomi's stock. a. Calculate the intrinsic value of Polomi's stock? (Round your answer to 2 decimal places.) Intrinsic value            $ b. What should be the price of Polomi's stock 1 year from now if market expect its current market price reflects its intrinsic value? (Round...

  • 31. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that...

    31. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, Do = 3.25). Investors expect the dividend to grow at 45% in years 1 and 2, they expect the dividend to grow at 25% in year 3 and they expect that all future dividends (that is, dividends in years 4, 5, ..., infinity) to grow at a constant rate of 5% per year. If the cost of capital for Phillips, Inc. stock is...

  • The Herjavec Co just paid a dividend of 2.00 per share on its stock. The dividends...

    The Herjavec Co just paid a dividend of 2.00 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 12 percent on the company's stock. The Herjavec Co.just paid a dividend of $2.00 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 12 percent on the company's...

  • 19. Hideki Corporation has just paid a dividend of $4.5 per share. Annual dividends are expected...

    19. Hideki Corporation has just paid a dividend of $4.5 per share. Annual dividends are expected to grow at a rate of 4 percent per year over the next four years. At the end of four years, shares of Hideki Corporation are expected to sell for $90. If the required rate of return is 12 percent, what is the intrinsic value of Hideki Corporation's share?

  • Problem 12 Intro A stock just paid an annual dividend of $1.1. The dividend is expected...

    Problem 12 Intro A stock just paid an annual dividend of $1.1. The dividend is expected to grow by 10% per year for the next 4 years. The growth rate of dividends will then fall steadily by 1.25% per year, from 10% in year 4 to 5% in year 8 and stay at that level forever. The required rate of return is 12%. 18 Attempt 6/10 for 10 pts. Part 1 What is the expected dividend in 8 years? 2+...

  • The Mintcoin Inc has just paid an annual dividend of 40 cents per share. You forecast...

    The Mintcoin Inc has just paid an annual dividend of 40 cents per share. You forecast that dividends of Mintcoin Inc will grow at the rate of 25% a year over the next four-year period. From year five on, you expect the subsequent growth rate of dividends to decrease to 8%, the industry average If the required rate of return for the stock is 12%, calculate its price.

  • The Compreses Corp has just paid a dividend of $0.5 per share. Dividends are expected to...

    The Compreses Corp has just paid a dividend of $0.5 per share. Dividends are expected to grow indefinitely at a constant rate of 6% per year. The risk-free rate is 4%, and the expected return on the market portfolio is 12%. The stock has a beta of .75. What is the intrinsic value of Compreses Corp?

  • Intro IBM just paid an annual dividend of $4.3 per share. The dividend is expected to...

    Intro IBM just paid an annual dividend of $4.3 per share. The dividend is expected to grow by 5% per year. The required rate of return is 12%. IB Part 1 Attempt 1/10 for 10 pts. By DDM/Gordon growth model, what is the price to sell the stock in 3 years? 1+ decimals Submit Part 2 Attempt 1/10 for 10 pts. If you buy the stock today, hold it, sell it in 3 years at the price computed in Part...

  • Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's...

    Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's dividends to grow by 5% forever. Its stock price is $37.4 and its beta is 1.3. The risk-free rate is 2% and the expected return on the market portfolio is 8%. Part 1 What is the best guess for the cost of equity?

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