ZuoTi.Pro
Question

An analyst is attempting to value shares of the Dominion Company. The company has just paid...

An analyst is attempting to value shares of the Dominion Company. The company has just paid a dividend of $2.35 per share. Dividends are expected to grow by 15 percent next year and 10 percent the year after that. From the third year onward, dividends are expected to grow at 4.5 percent per year indefinitely. If the required rate of return is 9 percent, the intrinsic value of the stock is closest to:

A: 60.58

B: 63.09

C: 65.27

D: 59.87

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
An analyst is attempting to value shares of the Dominion Company. The company has just paid...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 19. Hideki Corporation has just paid a dividend of $4.5 per share. Annual dividends are expected...

    19. Hideki Corporation has just paid a dividend of $4.5 per share. Annual dividends are expected to grow at a rate of 4 percent per year over the next four years. At the end of four years, shares of Hideki Corporation are expected to sell for $90. If the required rate of return is 12 percent, what is the intrinsic value of Hideki Corporation's share?

  • Suppose the risk-free rate is 1.58% and an analyst assumes a market risk premium of 7.67%. Firm A just paid a dividend...

    Suppose the risk-free rate is 1.58% and an analyst assumes a market risk premium of 7.67%. Firm A just paid a dividend of $1.10 per share. The analyst estimates the β of Firm A to be 1.37 and estimates the dividend growth rate to be 4.39% forever. Firm A has 275.00 million shares outstanding. Firm B just paid a dividend of $1.78 per share. The analyst estimates the β of Firm B to be 0.89 and believes that dividends will...

  • Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share...

    Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share dividend.  The company is expected to increase its dividend by 20% per year for the next two years.  After the second year, the dividend growth rate will be 5% per year for the next two years.  After the 4th year, dividends are expected to grow at a constant rate of 3% into the foreseeable future.  An analyst estimates that investors in the firm will require a 12% annual...

  • Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share...

    Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share dividend. The company is expected to increase its dividend by 25% per year for the next two years. After the second year, the dividend growth rate will be 5% per year for the next two years. After the 4th year, dividends are expected to grow at a constant rate of 3% into the foreseeable future. An analyst estimates that investors in the firm will...

  • Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share...

    Fowler and Woods Enterprises is a publicly traded company that just paid a $2.00 per share dividend.  The company is expected to increase its dividend by 20% per year for the next two years.  After the second year, the dividend growth rate will be 5% per year for the next two years.  After the 4th year, dividends are expected to grow at a constant rate of 3% into the foreseeable future.  An analyst estimates that investors in the firm will require a 12% annual...

  • The Compreses Corp has just paid a dividend of $0.5 per share. Dividends are expected to...

    The Compreses Corp has just paid a dividend of $0.5 per share. Dividends are expected to grow indefinitely at a constant rate of 6% per year. The risk-free rate is 4%, and the expected return on the market portfolio is 12%. The stock has a beta of .75. What is the intrinsic value of Compreses Corp?

  • A company has just paid its first dividend of $3.30. Next year's dividend is forecast to...

    A company has just paid its first dividend of $3.30. Next year's dividend is forecast to grow by 7 percent, followed by another 7 per cent growth in year two. From year three onwards dividends are expected to grow by 2.5 percent per annum, indefinitely. Investors require a rate of return of 12 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

  • A company has just paid its first dividend of $4.01. Next year's dividend is forecast to...

    A company has just paid its first dividend of $4.01. Next year's dividend is forecast to grow by 10 percent, followed by another 10 per cent growth in year two. From year three onwards dividends are expected to grow by 3.3 percent per annum, indefinitely. Investors require a rate of return of 18 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

  • House of Haddock has 5,030 shares outstanding and the stock price is $143. The company is...

    House of Haddock has 5,030 shares outstanding and the stock price is $143. The company is expected to pay a dividend of $23 per share next year and thereafter the dividend is expected to grow indefinitely by 4% a year. The President, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be...

  • QUESTION: Tanry Industries ltd.is an SME that has 1.9 million shares outstanding. It just paid a...

    QUESTION: Tanry Industries ltd.is an SME that has 1.9 million shares outstanding. It just paid a dividend of GH¢ 0.05. It estimates that dividends will grow at 17.9% for two years and 11.6 % for another two years. The discount rate is 11.9% Thereafter, the dividend growth rate will be a constant of 7.5 % (a) Compute the intrinsic share price. (b) If the founding shareholders are willing to sell 47 percent of its shares to an outside investor, how...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT