You own a security that provides an annual dividend of $130 forever. The security’s annual return is 6%. What is the present value of this security? Round your answer to the nearest cent.
present value of perpetuity=annual dividend/annual return
=130/0.06
which is equal to
=$2166.67(Approx).
You own a security that provides an annual dividend of $130 forever. The security’s annual return...
5.4b You own a security that provides an annual dividend of $145 forever. The security’s annual return is 9%. What is the present value of this security? Round your answer to the nearest cent.
Quantitative Problem: You own a security that provides an annual dividend of $155 forever. The security’s annual return is 7%. What is the present value of this security? Round your answer to the nearest cent.
Today, you invest a lump sum amount in an equity fund that provides an 12% annual return. You would like to have $10,900 in 6 years to help with a down payment for a home. How much do you need to deposit today to reach your $10,900 goal? Do not round intermediate calculations. Round your answer to the nearest cent
the dividend will be paid Singing Fish Fine Foods has a current annual cash dividend policy of $3.50. The price of the stock is set to yield a return of 12%. What is the price of this stock a for 11 years? b. for 17 years? a for 42 years? for 5 year? for 100 years? forever What is the price of this stock the dividend will be paid for 11 years? (Round to the nearest cent) - your answer...
What is the present value of a security that will pay $44,000 in 20 years if securities of equal risk pay 12% annually? Do not round intermediate calculations. Round your answer to the nearest cent. $ -4561.34 2)You need $11,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 6 years, with the first payment to be made one year from...
Dietterich Electronics wants its shareholders to earn a return of 15% on their investment in the company. At what price would the stock need to be priced today if Dietterich Electronics had a a. $0.20 constant annual dividend forever? b. $1.20 constant annual dividend forever? c. $1.70 constant annual dividend forever? d. $3.40 constant annual dividend forever? a. The value of the stock for an investor who wants a return of 15% with a constant annual dividend of $0.20 forever...
A particular security’s equilibrium rate of return is 8 percent. For all securities, the inflation risk premium is 3.05 percent and the real risk-free rate is 2.3 percent. The security’s liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. The security has no special covenants. Calculate the security’s default risk premium. (Round your answer to 2 decimal places. (e.g., 32.16))
Big Oil, Inc. has a preferred stock outstanding that pays a $5 annual dividend. If investors’ required rate of return is 5 percent, what is the market value of the shares? Round your answer to the nearest cent. $ _____ If the required return declines to 2 percent, what is the change in the price of the stock? Round your answer to the nearest cent. The price____ (increases or decreases) by $ _____
You own an oll plpeline that wll generate a $2.8 million cash return over the coming year. The pipeline's operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oll shipped declining, and cash flows are expected to decline by 5.5% per year. The discount rate is 12% a. What is the PV of the pipeline's cash flows if its cash flows are assumed to last forever? (Do not round intermediate...
You expect Stock Q to start paying annual dividends exactly one year from now. You think that the first dividend will be $0.53 and that the dividend will grow 4.4% per year forever after that. Your required rate of return for Stock Q is 8.4%. What is the value of Stock Q today? Round your answer to the nearest penny.