ZuoTi.Pro
Question

Firm Y expects to earn $6 per share next year. In the next three years, the...

Firm Y expects to earn $6 per share next year. In the next three years, the firm’s ROE is expected to be 12%, 15%, 18%, respectively, and its dividend payout ratio is 90%. After that, the firm's ROE is expected to increase to 25%, and the firm will set the dividend payout ratio = 60%. Assume that the discount rate is 20%. Find the stock price.

a) 30.17

b) 39.72

c) 34.68

d) 33.29

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:
Firm Y expects to earn $6 per share next year. In the next three years, the...
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

  • Sisters Corp. expects to earn $6 per share next year. The firm's ROE is 15% and...

    Sisters Corp. expects to earn $6 per share next year. The firm's ROE is 15% and its plowback ratio is 60%. The firm's market capitalization rate is 10%. a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Price Price ſ b. Calculate the price with no growth. Price Price c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGO PVGO |

  • please help! Sisters Corp expects to earn $7 per share next year. The firm's ROE is...

    please help! Sisters Corp expects to earn $7 per share next year. The firm's ROE is 14% and its plowback ratio is 60%. If the firm's market capitalization rate is 10%. a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Price $ b. Calculate the price with no growth. Price $ c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGO

  • Sisters Corp expects to earn $7 per share next year. The firm's ROE is 12% and...

    Sisters Corp expects to earn $7 per share next year. The firm's ROE is 12% and its plowback ratio is 80% If the firm's market capitalization rate is 10% a. Calculate the price with the constant dividend growth model (Do not round Intermediate calculations Price b. Calculate the price with no growth Price $ c. What is the present value of its growth opportunities? (Do not round Intermediate calculations.) PVGO

  • Fet 3 Sisters Corp. expects to earn $9 per share next year. The firm's ROE is...

    Fet 3 Sisters Corp. expects to earn $9 per share next year. The firm's ROE is 15% and its plowback ratio is 50%. If the firm's market capitalization rate is 10%. a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Price $ 117 b. Calculate the price with no growth Price 36 nces c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGOS 82

  • Sidman Products's common stock currently sells for $49 a share. The firm is expected to earn...

    Sidman Products's common stock currently sells for $49 a share. The firm is expected to earn $5.39 per share this year and to pay a year-end dividend of $2.70, and it finances only with common equity. a. If investors require an 11% return, what is the expected growth rate? Do not round intermediate calculations. Round your answer to two decimal places. b. If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of...

  • 9. Your investment advisor expects that on ABC S.A. you can earn 0,5PLN per share next...

    9. Your investment advisor expects that on ABC S.A. you can earn 0,5PLN per share next year, 0,6PLN the year after that, and then the earnings grow by 8% each year. Dividend payout is 60% and the required rate of return is 15%. Price per share is 4 PLN. What would you do with this proposal: buy, sell or retain?

  • Firm DCF, ROE = 35% , Dividend Payout Ratio=70%, next year’s earning per share (EPS) =...

    Firm DCF, ROE = 35% , Dividend Payout Ratio=70%, next year’s earning per share (EPS) = $8.00, assuming that market expected return is 20% and the risk-free rate is 5%. If increasing DPR will decrease firm value and we can use the constant dividend growth model to value the stock price, the stock beta must be larger than_____ and less than_____ (don't tell me the answer is 2.0 and 2.4) <- it's wrong (two decimals)

  • Firm DCF, ROE = 35% , Dividend Payout Ratio=70%, next year’s earning per share (EPS) = $8.00, assuming that market expec...

    Firm DCF, ROE = 35% , Dividend Payout Ratio=70%, next year’s earning per share (EPS) = $8.00, assuming that market expected return is 20% and the risk-free rate is 5%. If increasing DPR will decrease firm value and we can use the constant dividend growth model to value the stock price, the stock beta must be larger than [a] and less than [b] what is [a] and [b]?

  • Spencer Supplies' stock is currently selling for $60 a share. The firm is expected to earn...

    Spencer Supplies' stock is currently selling for $60 a share. The firm is expected to earn $5.40 per share this year and to pay a year-end dividend of $2.20. If investors require a 9% return, what rate of growth must be expected for Spencer? Round your answer to two decimal places. ____% If Spencer reinvests earnings in projects with average returns equal to the stock's expected rate of return, then what will be next year's EPS? (Hint: gL = ROE...

  • Spencer Supplies' stock is currently selling for $60 a share. The firm is expected to earn...

    Spencer Supplies' stock is currently selling for $60 a share. The firm is expected to earn $5.70 per share this year and to pay a year-end dividend of $3.90. a. If investors require a 9.5% return, what rate of growth must be expected for Spencer? Round your answer to two decimal places.   b. If Spencer reinvests earnings in projects with average returns equal to the stock's expected rate of return, then what will be next year's EPS? (Hint: gL =...

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