Homework Answers
The stock value (V) is the present value (PV) of all future cash flows (future dividends in this case).
PV of year-3 dividend = $0.5 / (1.14)3 = $0.5 / 1.4815 = $0.34 .... (1)
PV of year-4 dividend = $0.5 x 1.8 / (1.14)4 = $0.9 / 1.6890 = $0.53 ..... (2)
PV of year-5 dividend = $0.5 x 1.8 x 1.8 / (1.14)5 = $1.62 / 1.9254 = $0.84 ....(3)
PV of all future dividends thereafter = $1.62 x 1.05 / (0.14 - 0.05) = $1.701 / 0.09 = $18.9
Discounted back to current period, PV of this perpetual stream of dividend = $18.9 / (1.14)5 = $9.82 .....(4)
So, value of stock = (1) + (2) + (3) + (4) = $(0.34 + 0.53 + 0.84 + 9.82) = $11.53
Add Answer to:
0 X -W6 A Assignment: wWS Save Sunt adgment for Grading Que of Check My Work...
9. Problem 8-13 (Nonconstant Growth Stock Valuation) eBook Problem Walk-Through Nonconstant Growth Stock Valuation Simpkins Corporation...
9. Problem 8-13 (Nonconstant Growth Stock Valuation) eBook Problem Walk-Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 65% per year-during Years 4 and 5. After Year 5, the company should grow at a constant...
ebook Problem Walk Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because...
ebook Problem Walk Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year during Years 4 and 5. After Year 5, the company should grow at a constant rate of 5% per year....
Problem 8-13 (Nonconstant Growth Stock Valuation) Question 1 of 3 Check My Work (2 remaining) eBook...
Problem 8-13 (Nonconstant Growth Stock Valuation) Question 1 of 3 Check My Work (2 remaining) eBook Problem Walk-Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year - during Years 4 and 5....
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $2.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 45% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 5% per year. If the required return on the stock...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 55% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 8% per year. If the required return on the stock...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain...
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 75% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 10% per year. If the required return on the stock...
eBook Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $15 a share. The stock just...
eBook Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $15 a share. The stock just paid a dividend of $1.00 a share (i.e., Do - $1.00), and the dividend is expected to grow forever at a constant rate of 10% a year. What stock price is expected 1 year from now? Do not round intermediate calculations, Round your answer to the nearest cent. What is the estimated required rate of return on Widtke's stock? Do not round intermediate calculations....
Check My Work eBook Problem Walk-Through Computech Corporation is expanding rapidly and currently needs to retain...
Check My Work eBook Problem Walk-Through Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 33% per year - during Years 4 and 5, but after Year 5, growth should be a constant 10% per year. If the required return...
Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings;...
Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 48% per year - during Years 4 and 5; but after Year 5, growth should be a constant 6% per year. If the required return on Computech is 13%,...
NONCONSTANT GROWTH Computech Corporation is expanding rapidly and currently needs to retain all of its earnings;...
NONCONSTANT GROWTH Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly-at a rate of 35% per year-during Years 4 and 5; but after Year 5, growth should be a constant 9% per year. If the required return on Computech is 15%, what is the value...
9. Problem 8-13 (Nonconstant Growth Stock Valuation) eBook Problem Walk-Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 65% per year-during Years 4 and 5. After Year 5, the company should grow at a constant...
ebook Problem Walk Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year during Years 4 and 5. After Year 5, the company should grow at a constant rate of 5% per year....
Problem 8-13 (Nonconstant Growth Stock Valuation) Question 1 of 3 Check My Work (2 remaining) eBook Problem Walk-Through Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year - during Years 4 and 5....
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 55% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 8% per year. If the required return on the stock...
eBook Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $15 a share. The stock just paid a dividend of $1.00 a share (i.e., Do - $1.00), and the dividend is expected to grow forever at a constant rate of 10% a year. What stock price is expected 1 year from now? Do not round intermediate calculations, Round your answer to the nearest cent. What is the estimated required rate of return on Widtke's stock? Do not round intermediate calculations....
Check My Work eBook Problem Walk-Through Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 33% per year - during Years 4 and 5, but after Year 5, growth should be a constant 10% per year. If the required return...
Most questions answered within 3 hours.
-
Now that this course has taken you on a journey of introduction
to the world of...
asked 17 minutes ago -
Given a regression sum of squares equal to 2373.59 and a total
sum of squares equal...
asked 31 minutes ago -
The sandwich maker of the EE-Cole-Eye Sandwich Truck was just
fired (for a reason described below)...
asked 2 hours ago -
Name the following coordination compounds using systematic
nomenclature.
1. [Co(H2O)6]Cl2:
2. [Cr(NH3)6](NO3)3:
3. K4[Fe(CN)6]:
4. Na[Au(CN)4]:...
asked 2 hours ago -
Propose an efficient synthesis of 2-Bromo-5-nitrotoluene from
benzene. Hint: 3 steps. Consider directing effects of substituents....
asked 4 hours ago -
This assignment will explore the impact of corporate decisions
on a local versus a global perspective....
asked 3 hours ago -
Given the function below, F(w,x,y,z)= x’z+w’z’+w’y
a) draw a logic diagram for an implementation which uses...
asked 2 hours ago -
Most political philosophers believe we have a duty to obey laws,
even if the laws in...
asked 3 hours ago -
Which of the following are common negotiation outcome
mistakes?
a. Leave money on the table b....
asked 4 hours ago -
Convert the following quantities:
a) 0.819 atm to torr b) 512 mmHg to bar c) 11.2...
asked 4 hours ago -
C ++ Implement cat command
The purpose of this assignment is to provide practice using the...
asked 4 hours ago -
we
convert sugars into another form of stored potential energy. This
is called?
asked 5 hours ago