Homework Answers
| a) | D(t+1) = D(t)*(1+g1) | |
| D0 | 3.7 | |
| g | 0.06 | |
| D1 | 3.7*(1+.06) | |
| D1 | 3.922 | |
| Value of the stock | D1/(K-g) | |
| Value of the stock | 3.922/(.15 - .06) | |
| Value of the stock | 43.58 | |
| Value of the stock | $43.58 | |
| b) | D0 | 5.7 |
| g | 0.06 | |
| D1 | 5.7*(1+.06) | |
| D1 | 6.042 | |
| Value of the stock | D1/(K-g) | |
| Value of the stock | 6.042/(.15 - .06) | |
| Value of the stock | 67.13 | |
| Value of the stock | $67.13 | |
| c) | D0 | 3.7 |
| g | 0.06 | |
| D1 | 3.7*(1+.06) | |
| D1 | 3.922 | |
| Value of the stock | D1/(K-g) | |
| Value of the stock | 3.922/(.13 - .06) | |
| Value of the stock | 56.03 | |
| Value of the stock | $56.03 | |
| d) | D0 | 3.7 |
| g | 0.04 | |
| D1 | 3.7*(1+.04) | |
| D1 | 3.848 | |
| Value of the stock | D1/(K-g) | |
| Value of the stock | 3.848/(.15 - .04) | |
| Value of the stock | 34.98 | |
| Value of the stock | $34.98 | |
| e) | D0 | 4.4 |
| g | 0.04 | |
| D1 | 4.4*(1+.04) | |
| D1 | 4.576 | |
| Value of the stock | D1/(K-g) | |
| Value of the stock | 4.576/(.15 - .04) | |
| Value of the stock | 41.60 | |
| Value of the stock | $41.60 |
Add Answer to:
The dividend-growth model may be used to value a stock: D.(1+) Round your answers to the...
Answer the questions 1.What is the value of a stock based on the dividend-growth model if...
Answer the questions 1.What is the value of a stock based on the dividend-growth model if the firm currently pays a dividend of $1.30 that is growing annually at 5 percent and the required return is 9 percent? 2. If you purchase the stock in Problem 1 for $31.21, what is the return on the investment? 3. A financial analyst recommends purchasing DUDDZ, Inc. at $24.49. The stock pays a $1.60 dividend which is expected to grow annually at 4...
Common stock value-Constant growth Use the constant-growth model (Gordon model) to find the value of each...
Common stock value-Constant growth Use the constant-growth model (Gordon model) to find the value of each firm shown in the following table: (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Firm Dividend expected next year $1.20 4.00 0.65 6.00 2.25 Dividend growth rate 8.0% 5.0 10.0 8.0 8.0 Required return 13.0% 15.0 14.0 9.0 20.0 The value of firm A's stock is $ 24. (Round...
5. Constant growth stocks Super Carpeting Inc. (SCI) just paid a dividend (D ) of $1.44...
5. Constant growth stocks Super Carpeting Inc. (SCI) just paid a dividend (D ) of $1.44 per share, and its annual dividend is expected to grow at a constant rate (9) of 3.00% per year. If the required return (T) on SCI's stock is 7.50%, then the intrinsic value of SCI's shares is per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase...
Common stock value - Constant growth Use the constant growth model (Gordon growth model) to find...
Common stock value - Constant growth Use the constant growth model (Gordon growth model) to find the value of the firm shown in the following Dividend expected next year $1.13 Dividend growth rate 7.5% Required return 13.3% The value of the firm's stock is
According to the Gordon growth model, what is the value of a stock with a dividend...
According to the Gordon growth model, what is the value of a stock with a dividend of $1, required return on equity of 10%, and expected growth rate of dividends of 5%? A. $2 B. $10 C. $20 D. $21
Common stock value—Variable growth Lawrence Industries' most recent annual dividend was $1.25 per share (D =...
Common stock value—Variable growth Lawrence Industries' most recent annual dividend was $1.25 per share (D = $1.25), and the firm's required return is 16%. Find the market value of Lawrence's shares when dividends are expected to grow at 25% annually for 3 years, followed by a 5% constant annual growth rate in years 4 to infinity The market value of Lawrence's shares is $ . (Round to the nearest cent.)
C. Constant-growth model 933. A share of common stock has iust naid a dividend of $1.00....
C. Constant-growth model 933. A share of common stock has iust naid a dividend of $1.00. If the expected songs, run growth rate for this stock is 10 percent and if investors require a 19 percent rate return, what is the price of the stock? A. $7.49 B. $10.00 C. $35.21 D. $11.11 E. $12.22 Q34. The stock of Elsa Frozen Goods has a dividend yield of 7%. The dividends paid by this company are expected to grow at a...
4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the...
4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the next three years growth then declines linearly over eight years to a stable rate of 6%. The required return on this stock is 10% and the current stock price of firm D is $50. Calculate the value using an appropriate model.
Dividend Discount Model in stable growth Your task is to value the stock price of Harrington...
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...
Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at...
Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.50% per year. If the required return (rss) on SCI’s stock is 16.25%, then the intrinsic value of SCI’s shares is per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase in the required rate of...
Common stock value-Constant growth Use the constant-growth model (Gordon model) to find the value of each firm shown in the following table: (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Firm Dividend expected next year $1.20 4.00 0.65 6.00 2.25 Dividend growth rate 8.0% 5.0 10.0 8.0 8.0 Required return 13.0% 15.0 14.0 9.0 20.0 The value of firm A's stock is $ 24. (Round...
5. Constant growth stocks Super Carpeting Inc. (SCI) just paid a dividend (D ) of $1.44 per share, and its annual dividend is expected to grow at a constant rate (9) of 3.00% per year. If the required return (T) on SCI's stock is 7.50%, then the intrinsic value of SCI's shares is per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase...
Common stock value—Variable growth Lawrence Industries' most recent annual dividend was $1.25 per share (D = $1.25), and the firm's required return is 16%. Find the market value of Lawrence's shares when dividends are expected to grow at 25% annually for 3 years, followed by a 5% constant annual growth rate in years 4 to infinity The market value of Lawrence's shares is $ . (Round to the nearest cent.)
C. Constant-growth model 933. A share of common stock has iust naid a dividend of $1.00. If the expected songs, run growth rate for this stock is 10 percent and if investors require a 19 percent rate return, what is the price of the stock? A. $7.49 B. $10.00 C. $35.21 D. $11.11 E. $12.22 Q34. The stock of Elsa Frozen Goods has a dividend yield of 7%. The dividends paid by this company are expected to grow at a...
4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the next three years growth then declines linearly over eight years to a stable rate of 6%. The required return on this stock is 10% and the current stock price of firm D is $50. Calculate the value using an appropriate model.
Most questions answered within 3 hours.
-
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 31 minutes ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 1 hour ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 1 hour 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 3 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 3 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 4 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 6 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 6 hours ago -
implement a program that reads a number of rows and a symbol.
The program will draw...
asked 6 hours ago -
Assume that when adults with smartphones are randomly selected,
45% use them in meetings or classes....
asked 6 hours ago -
Determine the number of formula units of
Na2SO4 and moles of oxygen contained in 8.11
moles...
asked 6 hours ago -
Explain in steps on the following code
What would be the output when executed
using System;...
asked 6 hours ago