Homework Answers
As per CAPM, expected rate of return on the stock is 8% as follows:
Price of the stock using Dividend Discount Model= $17 as follows:
The answer is second option.
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Question 5 3 pts A stock just paid a $1 dividend. Dividend is expected to grow...
ABC’s stock has a beta of 1.30. The company just paid a dividend of $5.74, and...
ABC’s stock has a beta of 1.30. The company just paid a dividend of $5.74, and the dividends are expected to grow at 2.42 percent. The expected return on the market is 9.04 percent, and Treasury bills are yielding 3.17 percent. The most recent stock price is $79.50. Calculate the cost of equity using the dividend growth model method.
Two stocks each pay a $1 dividend that is growing annually at 8 percent. Stock A...
Two stocks each pay a $1 dividend that is growing annually at 8 percent. Stock A has a beta of 1.3; stock B's beta is 0.8. Which stock is more volatile? a. If treasury bills yield 6 percent and you expect the market to rise by 12 percent, what is your risk-adjusted required rate of return? b. Using the dividend-growth model, what is the maximum amount you would be willing to pay for each stock? C. d. Why are your...
Gabriel Industries stock has a beta of 1.12. The company just paid a dividend of $1.15,...
Gabriel Industries stock has a beta of 1.12. The company just paid a dividend of $1.15, and the dividends are expected to grow at 4 percent. The expected return on the market is 11.4 percent, and Treasury bills are yielding 3.8 percent. The most recent stock price is $85. a.Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b.Calculate...
Laverne Industries stock has a beta of 1.27. The company just paid a dividend of $.77,...
Laverne Industries stock has a beta of 1.27. The company just paid a dividend of $.77, and the dividends are expected to grow at 5.2 percent. The expected return of the market is 11.7 percent, and Treasury bills are yielding 5.2 percent. The most recent stock price is $81.50. Required: (a) Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)...
ABC’s stock has a beta of 1.40. The company just paid a dividend of $1.63, and...
ABC’s stock has a beta of 1.40. The company just paid a dividend of $1.63, and the dividends are expected to grow at 2.99 percent. The expected return on the market is 9.87 percent, and Treasury bills are yielding 2.69 percent. The most recent stock price is $54.39. Calculate the cost of equity using the CAPM.
1. A stock just paid a dividend of $1.58. The dividend is expected to grow at...
1. A stock just paid a dividend of $1.58. The dividend is expected to grow at 20.65% for five years and then grow at 4.73% thereafter. The required return on the stock is 11.20%. What is the value of the stock? Round to 2 decimal places. 2. A stock just paid a dividend of $1.58. The dividend is expected to grow at 25.17% for two years and then grow at 4.56% thereafter. The required return on the stock is 11.83%....
Floyd Industries stock has a beta of 1.2. The company just paid a dividend of $.50,...
Floyd Industries stock has a beta of 1.2. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 5.2 percent. The current price of the company's stock is $69. a. Calculate the cost of equity using the DDM method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g.,...
Question 2 10 pts A stock pays dividends annually. It just paid a dividend of $5...
Question 2 10 pts A stock pays dividends annually. It just paid a dividend of $5 that is expected to grow at a constant rate of 4% forever. Assuming a required rate of return of 13%, what is the value of the stock using the constant growth model? Note: Show your answer in units of dollars, use plain numbers with at least two digits after the decimal (e.g., for $12,345.67, type 12345.67).
1 A stock just paid a dividend of $1.13. The dividend is expected to grow at 23.73% for three years and then grow at 3....
1 A stock just paid a dividend of $1.13. The dividend is expected to grow at 23.73% for three years and then grow at 3.39% thereafter. The required return on the stock is 14.90%. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not_submitted #2 A stock just paid a dividend of $3.00. The dividend is expected to grow at 24.07% for five years and then grow at 4.10% thereafter. The required...
A stock just paid a dividend of $2.14. The dividend is expected to grow at 20.29%...
A stock just paid a dividend of $2.14. The dividend is expected to grow at 20.29% for three years and then grow at 4.33% thereafter. The required return on the stock is 11.91%. What is the value of the stock? The risk-free rate is 1.05% and the market risk premium is 6.41%. A stock with a β of 0.93 just paid a dividend of $2.52. The dividend is expected to grow at 21.12% for three years and then grow at...
Two stocks each pay a $1 dividend that is growing annually at 8 percent. Stock A has a beta of 1.3; stock B's beta is 0.8. Which stock is more volatile? a. If treasury bills yield 6 percent and you expect the market to rise by 12 percent, what is your risk-adjusted required rate of return? b. Using the dividend-growth model, what is the maximum amount you would be willing to pay for each stock? C. d. Why are your...
Gabriel Industries stock has a beta of 1.12. The company just paid a dividend of $1.15, and the dividends are expected to grow at 4 percent. The expected return on the market is 11.4 percent, and Treasury bills are yielding 3.8 percent. The most recent stock price is $85. a.Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b.Calculate...
Question 2 10 pts A stock pays dividends annually. It just paid a dividend of $5 that is expected to grow at a constant rate of 4% forever. Assuming a required rate of return of 13%, what is the value of the stock using the constant growth model? Note: Show your answer in units of dollars, use plain numbers with at least two digits after the decimal (e.g., for $12,345.67, type 12345.67).
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