Price per share is equal to the present value of all future dividends
Price per share =Dividend next year/(required return - growth rate)
= 1.5/(0.11-0.06)
=$30
Hence, the answer is C.
Summit Systems will pay a dividend of $1.50 next year. If you expect Summit's dividend to...
Summit Systems will pay a dividend of $ 1.45 this year. If you expect Summit's dividend to grow by 5.9 %per year, what is its price per share if the firm's equity cost of capital is 10.2 %?
Summit Systems will pay a dividend of $ 1.45 one year from now. If you expect Summit's dividend to grow by 5.7 % per year, what is its price per share if its equity cost of capital is 10.8 %? The price per share is $
ork 59 Summit Systems will pay a dividend of $1.55 this year. If you expect Summit's dividend to grow by 5.2% per year, what is its price per share if the firm's equity cost of capital is 11.1%? ou The price per share is $1. (Round to the nearest cent.) eral
Questions 5 – 7 use the following setup. Summit Systems will pay a dividend of $1.50 next year. If you expect Summit’s dividend to grow by 6% per year and its required return is 11%, what is its price per share today? Under which of the following scenarios will you be willing to pay a higher price than what you’ve solved for in Question 5? Group of answer choices A. The dividend will be $1.20 next year. B. The required...
Summit Systems has an equity cost of capital of 11.5 %, will pay a dividend of $1.50 in one year, and its dividends had been expected to grow by 5.5 % per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 2.5 % per year forever. a. What is the drop in value of a share of Summit Systems stock based on this information?...
Summit Systems has an equity cost of capital of 11.5%, will pay a dividend of $1.50 in one year, and its dividends had been expected to grow by 7.0% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a r of 4.0% per year forever. a. What is the drop in value of a share of Summit Systems stock based on this information? b. If you...
Summit Systems has an equity cost of capital of 11.5 %, will pay a dividend of $1.75 in one year, and its dividends had been expected to grow by 5.5 % per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 3.0 % per year forever. a. What is the drop in value of a share of Summit Systems stock based on this information?...
Summit Systems has an equity cost of capital of 10.0%, will pay a dividend of $2.00 in one year, and its dividends had been expected to grow by 5.5% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 4.0% per year forever. a. What is the drop in value of a share of Summit Systems stock based on this information? b. If you...
Summit Systems has an equity cost of capital of 11.5%, will pay a dividend of $1.25 in one year, and its dividends had been expected to grow by 6.0% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 3.0% per year forever. a. What is the drop in value of a share of Summit Systems stock based on this information? b. If you...
Summit Systems has an equity cost of capital of 10.0%, will pay a dividend of $1.75 in one year, and its dividends had been expected to grow by 6.0% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 3.0% per year forever. a. What is the drop in value of a share of Summit Systems stock based on this information? b. If you...