What is the implied perpetual growth rate of dividends for a stock with a current price...
What is the implied perpetual growth rate of dividends for a stock with a current price of $33.27, expected dividend next year of $1.6 per share, and a required return of 10%? Enter your answer in decimal form out to four decimals. For example, you would enter g=2.15% as 0.0215.
Homework Answers
The calculation of growth rate is shown below:
Value of share = Dividend/(required return - growth rate)
$33.27 = $1.60/(0.10 - Growth rate)
0.10 - Growth rate = $1.60/$33.27
0.10 - Growth rate = 0.048
Growth rate = 0.10 - 0.048 = 0.052 or 5.2%
Add Answer to:
What is the implied perpetual growth rate of dividends for a
stock with a current price...
The dividend yield on Alpha’s stock is 4.8%. The company just paid a $2.10 dividend, and...
The dividend yield on Alpha’s stock is 4.8%. The company just paid a $2.10 dividend, and investors believe that the dividend next year will be $2.205. This dividend growth rate is expected to remain unchanged into perpetuity. What is the implied required return on Alpha’s stock? Enter your answer in decimal form out to four decimals. For example, you would enter r=10.15% as 0.1015.
2. Rate of return implied in stock price A corporation has just paid a dividend of...
2. Rate of return implied in stock price A corporation has just paid a dividend of $5.00, i.e. Do=$5.00. Due to its growth potential, its dividends are expected to grow at 5% per year starting with the next dividend. If Jerry decides to buy the stock at the current market price $42, what rate of return will he earn? 3. Find the intrinsic value of a share of common stock A corporation has not paid dividend in the past and...
(required return) what required return is implied by the constant growth model for a stock that...
(required return) what required return is implied by the constant growth model for a stock that is selling for $25.00 per share and is expected to pay a single cash dividend next year of $1.80, and whose growth in dividend payments is expected to be 2% per year forever?
if the current price of common stock is $55 per share in current dividends that was...
if the current price of common stock is $55 per share in current dividends that was just paid was $2.20 per share, what is the required rate of return on the stock if the growth rate and dividend is expected to be 7% per year?
TUV Inc., just paid a dividend of $4.5 per share on its stock. The growth rate...
TUV Inc., just paid a dividend of $4.5 per share on its stock. The growth rate in dividends is expected to be a constant 6 percent per year indefinitely. Investors require an 20 percent return on the stock for the first three years, then a 12 percent return for the next three years, and then an 9 percent return thereafter. What is the current share price? Answer to two decimals, carry intermediate calcs. to four decimals.
5. Suppose you know a company's stock currently sells for $20 per share and the required...
5. Suppose you know a company's stock currently sells for $20 per share and the required return on the stock is 0.13. You also know that the required return is evenly divided between the capital gains yield (G) and the dividend yield (D1/P0) (this means that if the required retun is 9%, the capital gains yield is 4.5% and the dividend yield is 4.5%).If it's the company's policy to always maintain a constant growth rate in its dividends, what is...
Dixon Company just paid a dividend of $3.00 on its stock. The growth rate in dividends...
Dixon Company just paid a dividend of $3.00 on its stock. The growth rate in dividends is expected to be 30% from year 1 to year 5. The growth rate will then drop to -5% in years 6 and 7. It will then stabilize at 4% thereafter. Investors require a 15 % return on the stock for the first 5 years, 12% return for the next three years, and then 9% return thereafter. What is the current share price of...
Stock Valuation Bretton, Inc., just paid a dividend of $3.15 on its stock. The growth rate in dividends is expected to...
Stock Valuation Bretton, Inc., just paid a dividend of $3.15 on its stock. The growth rate in dividends is expected to be a constant 4 percent per year, indefinitely. Investors require a 15 percent return on the stock for the first three years, a 13 percent return for the next three years, and then an 11 percent return thereafter. What is the current share price for the stock?
Rasheed Farm just paid a dividend of $2.65 on its stock. The growth rate in dividends...
Rasheed Farm just paid a dividend of $2.65 on its stock. The growth rate in dividends is expected to be a constant 4.5 percent per year indefinitely. Investors require a return of 15 percent for the first three years, a return of 13 percent for the next three years and a return of 11 percent thereafter. What is the current share price?
Stock Valuation Fuji Co. is growing quickly. Dividends are expected to grow at a rate of...
Stock Valuation Fuji Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 12 percent and the company just paid a dividend of $1.30, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price
2. Rate of return implied in stock price A corporation has just paid a dividend of $5.00, i.e. Do=$5.00. Due to its growth potential, its dividends are expected to grow at 5% per year starting with the next dividend. If Jerry decides to buy the stock at the current market price $42, what rate of return will he earn? 3. Find the intrinsic value of a share of common stock A corporation has not paid dividend in the past and...
Stock Valuation Bretton, Inc., just paid a dividend of $3.15 on its stock. The growth rate in dividends is expected to be a constant 4 percent per year, indefinitely. Investors require a 15 percent return on the stock for the first three years, a 13 percent return for the next three years, and then an 11 percent return thereafter. What is the current share price for the stock?
Stock Valuation Fuji Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 12 percent and the company just paid a dividend of $1.30, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price
Most questions answered within 3 hours.
-
Oakdale Fashions, Inc. had $245,000 in 2018 taxable income.
Using the tax schedule in Table 2.3...
asked 10 minutes ago -
The marketing class at CSUS had an average score of 150. An
educational analyst determined that...
asked 1 hour ago -
Justin Case has purchased a $250 000 home by putting 20 % down
and taking out...
asked 1 hour ago -
1. In a labor market, marginal cost for a firm is
____________.
a. recruiting cost
b....
asked 2 hours ago -
On January 1, 2019, ABC Company issued $60,000,000 of 20-year,
10.5% bonds when the market rate...
asked 2 hours ago -
39.4% of US homes continue to use a landline in addition to cell
phone service. 3...
asked 3 hours ago -
Starting with benzene, synthesize 1-phenyl-1-butyne.
Show intermediates and reagents.
asked 4 hours ago -
Create a 32-run crossed array design with six control factors
and two noise factors such that...
asked 5 hours ago -
A 500g sample of sand from source A has the following amounts
retained on each sieve....
asked 5 hours ago -
In
your own words, please explain the essay by John Keynes wrote "The
End of Laissez...
asked 5 hours ago -
How are the matrix and pixels related? Why are smaller
pixels better for diagnostic quality?
asked 5 hours ago -
2. An AC generator has 80 rectangular loops on
its armature. Each loop is 11 cm...
asked 5 hours ago