What should you pay for a share of stock if the most recent dividend paid was $3.50 per share, you require a rate of return of 10%, and dividends are expected to grow at a constant rate of 2% per year?
Present value of stock = Dividend next year / (Interest rate - growth rate)
= 3.5 * 1.02 / (0.1 - 0.02)
= 3.5 * 1.02 / 0.08
= 44.625 ~ 44.63
What should you pay for a share of stock if the most recent dividend paid was...
What should you pay for a share of stock if the most recent dividend paid was $3.50 per share, you require a rate of return of 10%, and dividends are expected to grow at a constant rate of 2% per year?
What would you be willing to pay for the following share of stock? The company's most recent dividend was $2. Dividends are expected to grow by 10% the first two years, by 7 percent the next two years, and then at a rate of 5% for the unforeseeable future. The required rate of return is 13%. You must show in detail how you arrived at the correct answer.
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...
TMZ will pay a dividend next year of $2.84 per share on its stock. The dividends are expected to grow at a constant rate of 1.85 percent per year. If investors require a rate of return of 10.4 percent, what will be the stock price in Year 12?
You are considering buying stock in Bergkamp Mining. Its most recent dividend is $3.50 and its dividends have grown at an average annual rate of 4% over the last 10 years. However, the annual dividend growth has been as low as 1% in some years and as high as 6%. You want a 12% return from this stock. Round your answers to two decimals. What is the highest price you would pay for a share if you believe dividends will...
1) A company recently paid out a $4 per share dividend on their stock. Dividends are projected to grow at a constant rate of 5% into the future, and the required return on investment is 8%. After one year, the holding period return to an investor who buys the stock right now will be: A. 5% B. 3% C. 8% D. 13% 2) A company recently paid out a $2 per share dividend on their stock. Dividends are projected to...
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...
The Napa Co. just paid a dividend of $3.15 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. If investors require a return of 12 percent on the stock, what is the current price? What will the price be in four years?
Constant Growth Valuation: Zenith Corporations most recent dividend paid to shareholders was $6.00. This dividend is expected to grow at a constant rate of 4% per year. The required rate of return on the stock is 7%. What is the intrinsic value of Zenith’s stock?
Temple Lunch Trucks, Inc. just paid a dividend of $3.50. Dividends are expected to grow at a rate of 4% per year from here on out. If the risk-free rate is 2.5%, the expected return on the market is 5% and Temple Lunch Trucks’ stock has twice the average market risk, what is the most that you should be willing to pay for a share of this stock today?