Please post the work:
28.
-United Lighting ltd. just paid an annual dividend of $3.10 a share that is expected to grow at 4 percent per year. What is an investor expected to pay per share if the market rate of return for similar risky assets is 12 percent?
A. |
$37.33 |
B. |
$38.16 |
C. |
$38.83 |
D. |
$40.30 |
E. |
$42.00 |
SOLUTION :
Current dividend, D0 = 3.10 ($)
Dividend growth rate, g = 4% = 0.04
Market rate of return, r = 12 % = 0.12
So, as per Dividend constant growth Discount Model :
Expected price currently, P0
= D0(1+g) / (r - g)
= 3.10(1 + 0.04) / (0.12 - 0.04)
= 40.30 ($)
Amount that can be paid per share = Option D. $40.30 (ANSWER).
Please post the work: 28. -United Lighting ltd. just paid an annual dividend of $3.10 a share...
This morning you purchased a stock that just paid an annual dividend of $3.10 per share. You require a return of 9.2 percent and the dividend will increase at an annual growth rate of 4 percent. If you sell this stock in three years, what will your capital gain be? $5.87 $2.48 $7.74 $4.00 $10.13
This morning you purchased a stock that just paid an annual dividend of $3.10 per share. You require a return of 9.2 percent and the dividend will increase at an annual growth rate of 4 percent. If you sell this stock in three years, what will your capital gain be? $4.00 $5.87 $10.13 $7.74 $2.48
5) Pacific Corporation just paid an annual dividend of $3.00 per share on its common stock. Dividends are expected to grow at an annual rate of 1.5% hereafter. If the risk-free rate is 2%, the MRP is 7% and Pacific's stock is one-and-a-quarter times as risky as the market on average, what is the most that you should be willing to pay for a share of this stock today? A) $53.17 B) $47.89 C) $32.43 D) $32.92
21 points. Thomas Brothers just paid a $6.00 per share annual dividend. The dividend is expected to grow forever at a constant rate of 3 percent a year. The required rate of return on the common stock, res, is 11 percent. The current ratio is 1.95, the payout ratio is 40% and the tax rate is 35 %. a. What is your calculated value per share for the company's stock? b. If the current market price is $72.70 per share...
Question 12 1 pts Yum! Brands just paid an annual dividend of $2.20 a share and is expected to increase that amount by 2.2 percent per year. What price should you expect to pay per share if the market rate of return for this type of security is 14 percent at the time of your purchase? $19.89 $18.16 $19.47 $20.20
Question 12 1 pts Yum! Brands just paid an annual dividend of $2.20 a share and is expected to increase that amount by 2.2 percent per year. What price should you expect to pay per share if the market rate of return for this type of security is 14 percent at the time of your purchase? $18.16 $19.47 $19.89 $20.20 Question 13 1 pts Home Depot currently pays an annual dividend of $2.00 per share and adheres to a dividend...
Hope Industries just paid a dividend of $2.00 per share (i.e., D0 = $2.00). Analysts expect the company's dividend to grow 40 percent this year, and 20 percent in second year. After two years the dividend is expected to grow at a constant rate of 6 percent. The risk free rate is 4% and expected market risk premium is 6% and the firm is twice as risky as market. First calculate the current stock price using Excel. If the target...
A company just paid this year's dividend of $3.50 per share on its stock. The dividend is expected to grow at 28 percent per year for two years. Thereafter, the dividend will grow at 4.3 percent per year in perpetuity. If the appropriate discount rate is equal to 12 percent, what is the price of the company's stock today? A. $74 B. $61 C. $70 D. $67
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...
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?