Corporation is expected to pay the following dividends over the next 4 years: $14, $10, $9,...
Corporation is expected to pay the following dividends over the next 4 years: $14, $10, $9, $4.50
Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever.
If the required return on stock is 10 percent, what is the current share price?
Homework Answers
Present Value of Dividends =
| Year | Dividend | Discounting Factor (10%) | Present Value ( Dividend * Discounting factor) |
| 1 | 14.00 | 0.9090909090909090 | 12.7272727272727 |
| 2 | 10.00 | 0.8264462809917350 | 8.26446280991735 |
| 3 | 9.00 | 0.7513148009015780 | 6.7618332081142 |
| 4 | 4.50 | 0.6830134553650710 | 3.07356054914282 |
| Present Value of Dividends | 30.8271292944471 | ||
Expected Dividend in Year 5 = Dividend in Year 4 * ( 1+ Growth Rate)
= $ 4.50 * ( 1+ 4%)
= $ 4.68
Price in Year 4= Expected Dividend in Year 5 / (Required Return - Growth Rate)
= $ 4.68 / ( 10% -4%)
= $ 78
Present Value of Price in Year 4 = $ 78 * 0.6830134553650710
= $ 53.2750495184755
Hence, Current Price = Present Value of Price in Year 4 + Present Value of Dividends
= $ 53.2750495184755 + $30.8271292944471
= $ 84.10
Hence the correct answer is $ 84.10
Add Answer to:
Corporation is expected to pay the following dividends over the
next 4 years: $14, $10, $9,...
Lohn Corporation is expected to pay the following dividends over the next four years: $14, $10, $7, and $4. Afterward, t...
Lohn Corporation is expected to pay the following dividends over the next four years: $14, $10, $7, and $4. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price? Multiple Choice $63.27 $61.40 $68.82 $65.17 $60.11
Far Side Corporation is expected to pay the following dividends over the next four years: $14....
Far Side Corporation is expected to pay the following dividends over the next four years: $14. $12. $7 and $4. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. Required: If the required return on the stock is 12 percent, what is the current share price? (Do not round your intermediate calculations.)
Lohn Corporation is expected to pay the following dividends over the next four years: $9, $7,...
Lohn Corporation is expected to pay the following dividends over the next four years: $9, $7, $5, and $3. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 13 percent, what is the current share price?
Far Side Corporation is expected to pay the following dividends over the next four years: $14,...
Far Side Corporation is expected to pay the following dividends over the next four years: $14, $10, $6, and $2. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. Required: If the required return on the stock is 15 percent, what is the current share price? (Do not round your intermediate calculations.) $36.83 $37.94 $36.19 $34.99 $45.26
Synovec Corporation is expected to pay the following dividends over the next four years: $7, $13,...
Synovec Corporation is expected to pay the following dividends over the next four years: $7, $13, $18, and $3.25. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 10.4 percent, what is the current share price?
Lohn Corporation is expected to pay the following dividends over the next four years: $17. $12....
Lohn Corporation is expected to pay the following dividends over the next four years: $17. $12. $8, and $4. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 12 percent what is the current share price? Multiple Choice $66.03 $62.73 $72.49 $68.01 563.99
Far Side Corporation is expected to pay the following dividends over the next four years: $16,...
Far Side Corporation is expected to pay the following dividends over the next four years: $16, $12, $7, and $4. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. Required: If the required return on the stock is 10 percent, what is the current share price? (Do not round your intermediate calculations.) $87.60 $94.61 $85.34 $92.52 $89.83
Far Side Corporation is expected to pay the following dividends over the next four years: $11,...
Far Side Corporation is expected to pay the following dividends over the next four years: $11, $9, $5, and $2. Afterward, the company pledges to maintain a constant 8 percent growth rate in dividends forever. Required: If the required return on the stock is 16 percent, what is the current share price? (Do not round your intermediate calculations.) Options $33.62 $35.39 $36.45 $34.79 $43.33
Far Side Corporation is expected to pay the following dividends over the next four years: $13,...
Far Side Corporation is expected to pay the following dividends over the next four years: $13, $12, 59, and $5. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. Required: If the required return on the stock is 14 percent, what is the current share price? (Do not round your Intermediate calculations.) $71.18 $79.37 $72.46 $74.92 $7717 O O
Far Side Corporation is expected to pay the following dividends over the next four years: $13....
Far Side Corporation is expected to pay the following dividends over the next four years: $13. $9. $5, and $3. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 12 percent, the current share price is $ 30.89. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))
Far Side Corporation is expected to pay the following dividends over the next four years: $14. $12. $7 and $4. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. Required: If the required return on the stock is 12 percent, what is the current share price? (Do not round your intermediate calculations.)
Lohn Corporation is expected to pay the following dividends over the next four years: $17. $12. $8, and $4. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 12 percent what is the current share price? Multiple Choice $66.03 $62.73 $72.49 $68.01 563.99
Far Side Corporation is expected to pay the following dividends over the next four years: $13, $12, 59, and $5. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. Required: If the required return on the stock is 14 percent, what is the current share price? (Do not round your Intermediate calculations.) $71.18 $79.37 $72.46 $74.92 $7717 O O
Far Side Corporation is expected to pay the following dividends over the next four years: $13. $9. $5, and $3. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 12 percent, the current share price is $ 30.89. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))
Most questions answered within 3 hours.
-
4. Without doing any calculations, predict whether the observed
∆T would increase, decrease or remain the...
asked 18 minutes ago -
Based on the range, which of the following sets of scores has
the greatest variability? 3,...
asked 1 hour ago -
Ripples in a pond travel at a velocity of 3 m/s with one peak
passing a...
asked 1 hour ago -
A man stands on the roof of a building of height 13.0 mm and
throws a...
asked 1 hour ago -
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 2 hours ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 2 hours ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 2 hours ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 2 hours ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 2 hours ago -
Why are polymers not typically casted into products?
asked 3 hours ago -
When rolling a die 129 times, what is the probability of rolling
a 6 no more...
asked 3 hours ago -
4. A call option currently sells for $7.75. It has a strike
price of $85 and...
asked 3 hours ago