dividend | $ per share | ||||||
1st year | 2.81 | ||||||
2nd year | 3.09 | ||||||
Ex. Price at t=2 | 53.16 | ||||||
The problem is based dividend discount model | |||||||
Answer | |||||||
a | |||||||
price | = | D1/1+.114 | + | (D2+sale price of share)/(1+.114)2 | |||
2.81/1.114 | + | (3.09+53.16)/(1.114)*2 | |||||
2.522537 | + | 45.32625 | |||||
$ | 47.84879 | Per share | |||||
b | price of share | 24.6491 | |||||
c | price willing to pay | 24.6491 |
Suppose Acap Corporation will pay a dividend of $2.81 per share at the end of this...
Suppose Acap Corporation will pay a dividend of $ 2.78 per share at the end of this year and $ 2.94 per share next year. You expect Acap's stock price to be $ 50.56 in two years. Assume that Acap's equity cost of capital is 11.7 %. a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years? b. Suppose instead you plan to hold...
Suppose Acap Corporation will pay a dividend of $ 2.75$2.75 per share at the end of this year and $ 2.94$2.94 per share next year. You expect Acap's stock price to be $ 53.33$53.33 in two years. Assume that Acap's equity cost of capital is 8.5 %8.5%. a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years? b. Suppose instead you plan to hold...
Problem 7-9 Question Help Suppose Acap Corporation will pay a dividend of $2.74 per share at the end of this year and $3.01 per share next year. You expect Acap's stock price to be $53.99 in two years. Assume that Acap's equity cost of capital is 9.9%. a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years? b. Suppose instead you plan to hold...
Arddy Bhd has conducted their meeting last week. The company will pay a dividend of RM2.20 per share at the end of this year and RM2.30 per share next year. Based on your analysis, you expect the company stock price will increase to RM38.50 in two years. Assuming that the Arddy Bhd’s equity cost of capital is 10%. Required: (i) Calculate the price that you would be willing to pay for a share of Arddy today, if you planned to...
15) Lunar Adventures Inc is expected to pay a dividend of $1.40 per share at the end of this year and expected to pay a dividend of $1.50 per share at the end of the second year. As well, you expect the stock price to be $25.00 at the end of the second year. If the firm's equity cost of capital is 10% and you plan to hold the stock for one year, the price you would expect to be...
Assume Evco, Inc. has a cumrent stock price of $53.16 and wil pay a $1.85 dividend in one year. its equity cost of capital is 17%. What price must you expect Evco stock to sell for immediately after the Sem pays the dividend in one year to justily s curent price? We can expect Evco stock to sell for $ (Round to the nearest cent)
A stock is expected to pay the following dividends per share over the next three years, respectively: $1.50, $1.95 and $2.20. If you expect to be able to sell the stock for $54.26 in three years and your required rate of return is 8%, what is the most that you should be willing to pay for a share of this stock today? no excel handwork only
A company is expected to pay a dividend of $1.06 per share one year from now and $1.66 in two years. You estimate the risk-free rate to be 3.3% per year and the expected market risk premium to be 5.6% per year. After year 2, you expect the dividend to grow thereafter at a constant rate of 4% per year. The beta of the stock is 1.3, and the current price to earnings ratio of the stock is 13. What...
A company is expected to pay a dividend of $1.34 per share one year from now and $1.96 in two years. You estimate the risk-free rate to be 4.4% per year and the expected market risk premium to be 5.1% per year. After year 2, you expect the dividend to grow thereafter at a constant rate of 5% per year. The beta of the stock is 1, and the current price to earnings ratio of the stock is 16. What...
Suppose you are thinking of purchasing the stock of WHATUPDAWG, Inc. In addition to the dividend and price from year one you expect it to pay a $4.60 dividend in two years. You believe you can sell the stock for $28.75 at that time. You require a return of 10% on investments of this risk. What is the maximum you would be willing to pay? Suppose you are thinking of purchasing the stock of Super Dawgs, Inc. In addition to the dividend and price from...