You own a company that competes with Old World DVD Company. Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $2.50 per share dividend, and you expect to increase the dividend 10 percent next year. However, you then expect your dividend growth rate to begin going down—to 5 percent the following year, 3 percent the next year, and to -2 percent per year thereafter. Based upon these estimates, what is the value of a share of your company’s stock? Assume that the required rate of return is 14 percent.
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You own a company that competes with Old World DVD Company (in the previous problem). Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $1.50 per share dividend, and you expect to increase the dividend 10 percent next year. However, you then expect...
You own a company that competes with Old World DVD Company. Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $2.36 per share dividend, and you expect to increase the dividend 10 percent next year. However, you then expect your dividend growth rate...
You own a company that competes with Old World DVD Company. Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $2.36 per share dividend, and you expect to increase the dividend 10 percent next year. However, you then expect your dividend growth rate...
You own a company that competes with Old World DVD Company. Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $1.97 per share dividend, and you expect to increase the dividend 10 percent next year. However, you then expect your dividend growth rate...
Ottocell Motor Company just paid a dividend of $1.40. Analysts expect its dividend to grow at a rate of 10 percent next year, 8 percent for the following two years, and then a constant rate of 5 percent thereafter. What is the expected dividend per share at the end of year 5?
(a) Union Pacific currently does not pay a dividend. You expect that the company will begin paying a dividend of $2 per share in 6 years, and you expect dividends to grow indefinitely at a 3.5% rate per year thereafter. If the required rate of return is 12 percent, how much is the stock currently worth? [8 Points) (b) Walmart Inc. just paid a dividend of do = $2.08 per share. The dividends are expected to grow at a rate...
(a) You are a stock analyst in charge of valuing high-technology firms, and you are expected to come out with buy-sell recommendations for your clients. You are currently analyzing a firm called e talk.com that specializes in internet-based communication. You are expecting explosive growth in this area. However, the company is not currently profitable even though you believe it will be in the future. Your projections are that the firm will pay no dividends for the next 3 years. F...
Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a dividend of $3.40 per share in 10 years, and you expect dividends to grow perpetually at 4.4 percent per year thereafter. If the discount rate is 11 percent, how much is the stock currently worth?
Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a dividend of $3.00 per share in 12 years, and you expect dividends to grow perpetually at 4 percent per year thereafter. If the discount rate is 12 percent, how much is the stock currently worth? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a dividend of $2.20 per share in 8 years, and you expect dividends to grow perpetually at 3.2 percent per year thereafter. If the discount rate is 14 percent, how much is the stock currently worth? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price