Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require a return of 8.5%...

Question

Question

Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require a return of 8.5% What is t

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Q3. The share worth is computed as shown below:

Dividend at end of year 1 will be

= $ 1.88 x 1.16

= $ 2.1808

Dividend at end of year 2 will be

= $ 1.88 x 1.16²

= $ 2.529728

Dividend at end of year 3 will be

= $ 2.529728 x 1.055

= $ 2.668863 Approximately

So the price will be:

= $ 2.1808 / 1.088¹ + $ 2.529728 / 1.088² + 1 / 1.088² [ ( $ 2.668863 / ( 0.088 - 0.055 ) ]

= $ 72.46 Approximately

Q4. The last dividend paid is computed as shown below:

Price = [ Dividend ( 1 + growth rate ) ] / ( required rate of return - growth rate )

$ 66.10 = [ Dividend ( 1 + 0.04 ) ] / ( 0.085 - 0.04 )

Dividend = $ 2.86 Approximately

Feel free to ask in case of any query relating to this question

Add a comment

Answer 2

Similar Homework Help Questions

Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require...

Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require a return of 8.5% What is the amount of the last dividend Donco
Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require...

Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require a return of 8.5% What is the amount of the last dividend Donco
The CI Corp. has just paid a cash dividend of $2 per share. If investors require 16% return from investments such as this

Ex 4) The CI Corp. has just paid a cash dividend of $2 per share. If investors require 16% return from investments such as this and the dividend is expected to grow at a steady 8% per year, what is the current value of the stock? What will the stock be worth in 5 years, given the same assumptions about the required return and the dividends? Answer: $27; $39.67Ex 5) A stock is selling for $40 per share currently. The...

h d the are Dividendis expected r y year after than Che the next nguere dides...

h d the are Dividendis expected r y year after than Che the next nguere dides s e i spor share sustainable rate of 5. 3 this what should t h todas or share co stock has dividends which are expected to grow at 4% forever. A share of Doncos "0 and investors require a return of 8.5%. What is the amount of the last dividend Do
1. ABC, Inc. is expected to pay an annual dividend per share of $2.80, and investors require a rate of return on S&P...

1. ABC, Inc. is expected to pay an annual dividend per share of $2.80, and investors require a rate of return on S&P500 index is 12%, with the T-bill rate at 6%. What should be the current share price of ABC's stock if ABC's beta is 1.7, with a growth rate of 5%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2. If firm A has a higher plowback ratio than firm B, then firm A...
The common share of ABC, corp., is selling for $42 a share and investors require a...

The common share of ABC, corp., is selling for $42 a share and investors require a 15% return on the stock. If two thirds of the return on this stock are derived from dividends yield and the other one third is derived from capital gain yield. What is the amount of the current dividend Do? O 1) 3.65 O2) $3.86 O 3) $4.00 O4) $4.15

Investors require a return of 14.8% per year to hold a stock. The stock currently does...

Investors require a return of 14.8% per year to hold a stock. The stock currently does not pay any dividends and is expected to begin paying a dividend of $1.65 in 3 years from now, then the dividends are expected to grow forever at a constant rate of 8.0%. What's the stock price? A) $13.74 OB) $16.05 OC) $17.34 D) $18.41 O E) $15.72
32. IBIS Corporation has had dividends grow from $2.50 per share to $6.00 per share over...

32. IBIS Corporation has had dividends grow from $2.50 per share to $6.00 per share over the last 10 years (the $6.00 per share dividend was paid yesterday, that is, Do = $6.00). This compounded annual growth rate in dividends is expected to continue into the future forever. If the current market price of IBIS's stock is $45.00 per share, what rate of return do investors expect to receive from buying IBIS stock?
The common share of ABC, corp., is selling for $42 a share and investors require a...

The common share of ABC, corp., is selling for $42 a share and investors require a 15% return on the stock. If two thirds of the return on this stock are derived from dividends yield and the other one third is derived from capital gain yield. What is the amount of the current dividend D0? Question 27 options: 1) 3.65 2) $3.86 3) $4.00 4) $4.15

ABC, Inc. is expected to pay an annual dividend per share of $3.50, and investors require...

ABC, Inc. is expected to pay an annual dividend per share of $3.50, and investors require a rate of return on S&P500 index is 10%, with the T-bill rate at 5%. What should be the current share price of ABC's stock if ABC's beta is 1.6, with a growth rate of 6%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Share Price = ?

Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require a return of 8.5%...

Homework Answers

Add Answer to:
Decock has dividends which are expected t o forever. A share of Doncosto 566.and investors require a return of 8.5%...

Post as a guest

Earn Coins