a. Growth rate = Return on Equity * Percentage of retained earnings = 0.123 * 0.52 = 6.396%
b. Expected return = Dividend / Price + growth = [$2.75(1.06396) / $44] + 0.06396 = 13.05%
c. Yes
(Common stock valuation) Dalton Inc. has a return on equity of 12.3 percent and retains 52 percen...
(Common stock valuation) Dalton Inc. has a return on equity of 11.1 percent and retains 55 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.50 and the stock is currently selling for $44. a. What is the growth rate for Dalton Inc.? b. What is the expected return for Dalton's stock? c. If you require a 12 percent return, should you invest in the firm? a. What is the growth rate for Dalton Inc.? (Round...
(Common stock valuation) Dalton Inc. has a return on equity of 12.6 percent and retains 54 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.25 and the stock is currently selling for $42. a. What is the growth rate for Dalton Inc.? b. What is the expected return for Dalton's stock? c. If you require a 13 percent return, should you invest in the firm? a. What is the growth rate for Dalton Inc.? %...
(Common stock valuation) Dalton Inc. has a return on equity of 12.5 percent and retains 54 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.50 and the stock is currently selling for $38 a. What is the growth rate for Dalton Inc.? b. What is the expected return for Dalton's stock? c. If you require a 13 percent return, should you invest in the firm? a. What is the growth rate for Dalton Inc.? %...
4. The preferred stock of You Corp pays a $3.75 dividend. What is the value of the stock of your required return is 8.5%? Look at valuation for preferred stock 5. You are looking to invest in a company that has 10.5% return on equity and retains 60% of its earnings for reinvestment purposes. The company recently paid a dividend of $3.75 and the stock is currently selling for $45. Look at valuation for common stock A) What is the...
(Common stock valuation) Bates Inc. pays a dividend of $2.75 and is currently selling for $36.30. If investors require a return of 16 percent on their investment from buying Bates stock, what growth rate would Bates Inc. have to provide the investors? The growth rate Bates Inc. would have to provide the investors is ??
Assignment Stock Valuation 1. (Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of S2 30per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent. a. What is the value of the stock to you, given a 15percent requiredrate of rectum? b. Should you purchase this stock? 2. (Measuring growth) Thomas, Inc.'s return on equity is 13 percent and management has plans to...
Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for S77.77. The firm just recently paid a dividend of $4.11. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.05. After underpricing and flotation costs, the firm expects to net $71.55 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth...
growth rate required
Question Help Common stock valuation) Abercrombie & Fitch's common stock pays a dividend of $2.75. It is currently selling for $31.17. If the firm's investors require a return of 9 percent on their investment from buying Abercrombie & Fitch stock, what growth rate would Abercrombie & Fitch have to provide the investors? The growth rate Abercrombie & Fitch would have to provide the investors is %. (Round to two decimal places.)
Valuation of Stock 1) P. Noel Company's common stock has just paid a $2.00 dividend. If investors believe that the expected rate of return on P. Noel is 14% and that dividends will grow at the rate of 5% per year for the foreseeable future, what is the value of a share of P. Noel stock? A) $15.00 B) $22.22 C) $23.33 D) $40.00 2) Green Company's common stock is currently selling at $24.00 per share. The company recently paid...
3. Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $58.74. The firm just recently paid a dividend of $3.97. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.95. After underpricing and flotation costs, the firm expects to net $54.63 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that...