Question

Suppose Disney Inc. is expected to pay a $5 dividend in one year. If the dividend is expected to grow at 8% per year and the required return is 12%, what is the price?

Versace Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%.  What is the current price?

Babe Clothing Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%.  What is the price expected to be in year 4?

A firm’s stock is selling for $20.00. They just paid a $1 dividend and dividends are expected to grow at 10% per year.  What is the required return?

Suppose we are trying to value the company Value Estates, a real estate developer that does not pay dividends. If the appropriate industry PE for this type of company is 18 and you predict earnings to be $4.00 per share for the coming year.  What is the forecasted stock price for a year from now?

Answer 1

Next year dividend CD) = 5 growth rate = 8% Required Retum = 12% Price = Di Re- growth rate where Re- Required rate of return. e Price = 5 012-.08 - Su = $125 Answer 1.04