A. Company DBC has just paid a dividend of $3. As DBC is a young company...
A. Company DBC has just paid a dividend of $3. As DBC is a young company and successful, it is estimated that they will grow at rate of 20% for 5 years and then at 3% in perpetuity. The company faces a required return on equity of 7%. What is the current price of the company’s stock using the DDM model? Use excel for all calculations.
B.Describe how sensitive your calculation in part A is to changes in the perpetual growth rate, the required return on equity and the initial dividend. Graph your results over a range of variables both above and below that described in part A. For which variable is the share price most sensitive? Why? Use excel for all calculations.
Homework Answers
Add Answer to:
A. Company DBC has just paid a dividend of $3. As DBC is a young
company...
Floyd Industries stock has a beta of 1.20. The company just paid a dividend of $.50,...
Floyd Industries stock has a beta of 1.20. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 5.9 percent. The most recent stock price for the company is $76. a. Calculate the cost of equity using the DDM method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal...
Floyd Industries stock has a beta of 1.2. The company just paid a dividend of $.50,...
Floyd Industries stock has a beta of 1.2. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 5.2 percent. The current price of the company's stock is $69. a. Calculate the cost of equity using the DDM method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g.,...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do. of $1.40. It expects to...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do. of $1.40. It expects to grow at a constant rate of 3% per year. If Investors require a 12% return on equity, what is the current price of Hubbard's common stock? Round your answer to the nearest cent. Do not round Intermediate calculations. per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.20. It expects to...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.20. It expects to grow at a constant rate of 2% per year. If investors require a 10% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
9.2 Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.00. It expects...
9.2
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.00. It expects to grow at a constant rate of 3% per year. If investors require a 10% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend...
A company has just paid a $2.10 dividend per share. The dividend is expected to grow...
A company has just paid a $2.10 dividend per share. The dividend is expected to grow at a constant rate of 3% per year. The required return is 8%. What is the current value of the company’s stock?
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.10. It expects to...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.10. It expects to grow at a constant rate of 3% per year. If investors require a 12% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
. Mike works for a prominent technology company. His company just paid a $1.50 dividend per...
. Mike works for a prominent technology company. His company just paid a $1.50 dividend per share. The required return for his company’s stock is 12%. A. If the dividend that Mike’s company just paid is a perpetual dividend, what is the price of the stock today? (Hint: Zero-growth Dividend Stock) B.(QUESTION 22) Mike’s company has decided to increase the company’s dividend by 6% forever, on an annual basis starting with the next dividend. If this is the case, what...
ABC Company just paid annual dividend of $5 today. The dividend is expected to grow at...
ABC Company just paid annual dividend of $5 today. The dividend is expected to grow at 3% for the next 5 years, then it will grow at 5% in perpetuity. If stocks of similar company earn 9% annual return, what is the price of a share of ABC Company stock?
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.90. It expects to...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.90. It expects to grow at a constant rate of 4% per year. If investors require a 9% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do. of $1.40. It expects to grow at a constant rate of 3% per year. If Investors require a 12% return on equity, what is the current price of Hubbard's common stock? Round your answer to the nearest cent. Do not round Intermediate calculations. per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.20. It expects to grow at a constant rate of 2% per year. If investors require a 10% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
9.2
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.00. It expects to grow at a constant rate of 3% per year. If investors require a 10% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.10. It expects to grow at a constant rate of 3% per year. If investors require a 12% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.90. It expects to grow at a constant rate of 4% per year. If investors require a 9% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is...
Most questions answered within 3 hours.
-
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 21 minutes ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 52 minutes ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 2 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 2 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 3 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 5 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 5 hours ago -
implement a program that reads a number of rows and a symbol.
The program will draw...
asked 5 hours ago -
Assume that when adults with smartphones are randomly selected,
45% use them in meetings or classes....
asked 5 hours ago -
Determine the number of formula units of
Na2SO4 and moles of oxygen contained in 8.11
moles...
asked 5 hours ago -
Explain in steps on the following code
What would be the output when executed
using System;...
asked 5 hours ago -
Given the information in the table, which of the following
statements is CORRECT?
Stock A
Stock...
asked 5 hours ago