Martha works for a prominent technology company. Her company just paid a $1.50 dividend per share. The required return for her company’s stock is 12%.
Question:
Consider the following information. Suppose Martha’s company is expected to increase dividends by 12% in one year, and by 8% in two years. After that, her company’s dividends will increase at a rate of 6% indefinitely. If the last dividend was $1.50 and the required rate of return in 12%, what is the current price of the stock?
D1=(1.5*1.12)=1.68
D2=(1.68*1.08)=1.8144
Value after year 2=(D2*Growth rate)/(Required return-Growth rate)
=(1.8144*1.06)/(0.12-0.06)
=32.0544
Hence current price=Future dividend and value*Present value of discounting factor(rate%,time period)
=1.68/1.12+1.8144/1.12^2+32.0544/1.12^2
=$28.5
Martha works for a prominent technology company. Her company just paid a $1.50 dividend per share....
. 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...
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%. (Input all answers as positive values, no commas, with no symbols ex. no $ or %. Input all % answers as whole numbers without symbols ex. 10.03 for .1003. Input all final answers two decimal places out.) 22. Mike’s company has decided to increase the company’s dividend by 6% forever, on an annual basis starting...
Contact Corporation just paid a dividend of $1.50 per share. The company expects that the dividend will grow at a rate of 10% for the next two years. After year two it is expected that the dividend will decline at a rate of 3% indefinitely. If the required return is 12%, what is the value of a share of stock?
Thirsty Cactus Corp. just paid a dividend of $1.50 per share. The dividends are expected to grow at 35 percent for the next 8 years and then level off to a 6 percent growth rate indefinitely. Required : If the required return is 13 percent, what is the price of the stock today? rev: 09_18_2012 $3.58 $125.72 $123.26 $94.26 $120.79
A company just paid a dividend of $1.50 per share. The consensus forecast of financial analysts is a dividend of $1.90 per share next year and $2.20 per share two years from now. Thereafter, you expect the dividend to grow 5% per year indefinitely into the future. If the required rate of return is 14% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)
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...
The Dev Idend Corporation paid a dividend of $1.50 per share last period. The company's financial management expects that the dividend will remain at that level for two years. Thereafter, it is expected that the dividend will grow at a rate of 2.8% indefinitely. If the required return is 9%, what is the value of a share of stock now?
The MNO Corporation just paid a dividend of $2.00 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $40 a share, what is the company’s cost of equity?
1) A company just paid a dividend of $1.50 on its stock. The dividend is expected to grow at 4% forever. If the discount rate is 6%, what is the present value of the stock? Group of answer choices $80.97 $74.00 $79.38 $78.00 2) A stock is expected to pay a dividend of $3 next year. The dividend will grow at a rate of 5% for 2 years, and will then grow at a rate of 3% from that point...
A7X Corp. just paid a dividend of $1.40 per share. The dividends are expected to grow at 35 percent for the next 9 years and then level off to a growth rate of 8 percent indefinitely. If the required return is 12 percent, what is the price of the stock today?