Compute the current price of a stock using the Discounted Dividend Model (DDM) if
Present stock price = Present value of dividend + present value of stock price = 32 / 1.14 + 120 / 1.14
= 28.07 + 105.26
= 133.33
Compute the current price of a stock using the Discounted Dividend Model (DDM) if Required rate...
4. Using Discounted Dividend Model compute the price of a stock if • You hold the stock for one year Expected dividend per share (D1)-$15 • Expected ex-dividend price at the end of the year (PI) - $100 DO • Risk adjusted discount rate or market capitalization (expected rate of return in order to invest) (k)- 129
Your task is to value the stock price of Tornado with the Dividend Discount Model (DDM) growth. You have the following information: Recent dividends per share (DIVo) Risk-free rate (rr) Beta of the stock (β) Average stock return on the market n Estimated long-term dividends growth rate g 5.32 3.75% 1.7084 10% 3% 1) Calculate the value of the stock of Tormado using the Dividend Discount Model (DDM stable growth. 2) The stock currently trades at 34.71 in the stock...
*Using the 2-Stage Dividend Discount Model (DDM) compute the intrinsic Value for Company X based on the following information: --Company X pays a current annual dividend of $1.25 and is expected to grow at 15% for the next two years and then at 5% thereafter. The required rate of return of Company X is 8%.
Valuing Stocks using the DDM Review the dividend discount model w/ risk presented in chap 8 of the text. You are thinking about investing in stock in company XYZ which paid a dividend of $10 this year & whose dividends you expect to grow at 4% per year. The risk free (rf) rate is 3% & you require a risk premium (rp) of 5%. If the price of stock in the market is $200 a share, should you buy the...
Problem 1: A corporation will pay a $1.00 dividend (D1) in the next 12 months on a share of common stock. The required rate of return is 5% and the constant growth rate is 4%. Compute the theoretical stock price. Problem 2: A corporation expects to pay dividends (D1) of $1.75 per share at the end of the current year and the current price of its common stock is $30 per share. The expected growth rate is 3.5% and flotation...
*Using the Constant-Growth Dividend DDM compute the Required Rate of Return for Company Y based on the following information: --Company Y pays a current dividend of $1.50 which is expected to grow indefinitely at a rate of 5%. The current value of Company Y shares is $42.50.
Dick's Co Pays an annual dividend of $6 to its preferred stock. The rate of return on T-Bill is 3% and the market risk premium is 8%. What is the intrinsic value of the preferred stock if the beta of the preferred stock is 1.257 Mountain Development Corporation is expected to pay a dividend of $3.00 in the upcoming year. Predicted to grow at the rate of 8% per year. The firms market capitalization rate is 14%. Using the constant...
Dividend Discount Model in stable growth Your task is to value the stock price of Harrington Ltd with the Dividend Discount Model (DDM) in stable growth. You have the following information: Dividends per share DIV0 €1.89 Risk-free rate rF 3.00% Beta β 1.182 Expected return on stocks 8.50% Estimated long-term dividends growth rate 2.75% Required: (a) Calculate the value of the stock of Harrington Ltd using the Dividend Discount Model (DDM) in stable growth; (b) The stock currently trades at...
Your task is to value the stock price of Harrington Ltd with the Dividend Discount Model (DDM) in stable growth. You have the following information: Dividends per share DIV0 €1.89 Risk-free rate rF 3.00% Beta β 1.182 Expected return on stocks 8.50% Estimated long-term dividends growth rate 2.75% Required: (a) Calculate the value of the stock of Harrington Ltd using the Dividend Discount Model (DDM) in stable growth; (b) The stock currently trades at €39.40 in the stock market;...
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock price at any point in time. III. requires the required return to be higher than the growth rate. IV. assumes that dividends increase by a constant amount forever. V. none of the above is correct Multiple Choice 0 II, and IV only 0 V only 0 1, I, II, and IV only 0 Ill only 0 In order to estimate...