Homework Answers
a)Fair present value = D0(1+g)/(rs-g)
= 2.40 (1+ .018)/(.125-.018)
= 2.40 * 1.018 / .107
= $ 22.83 per share
b)Expected dividend in 5 years (D5) = D0(1+g)^n
= 2.4(1+.018)^5
= 2.4 * 1.09330
= 2.62392
Price in 4 years =D5/(rs-g)
= 2.62392 /(.155-.018)
= 2.62392/.137
= $ 19.15per share
Add Answer to:
step by step instructions 4 A stock you are evaluating just paid an annual dividend of...
A stock you are evaluating just paid an annual dividend of $3.00. Dividends have grown at...
A stock you are evaluating just paid an annual dividend of
$3.00. Dividends have grown at a constant rate of 1.3 percent over
the last 15 years and you expect this to continue.
A stock you are evaluating just paid an annual dividend of $3.00. Dividends have grown at a constant rate of 1.3 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 13.1 percent, what...
A stock you are evaluating just paid an annual dividend of $2.70. Dividends have grown at...
A stock you are evaluating just paid an annual dividend of $2.70. Dividends have grown at a constant rate of 2.4 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 12.8 percent, what is its fair present value? b. If the required rate of return on the stock is 15.8 percent, what should the fair value be four years from today? (For all requirements, do...
A stock you are evaluating just paid an annual dividend of $2.10. Dividends have grown at...
A stock you are evaluating just paid an annual dividend of $2.10. Dividends have grown at a constant rate of 1.2 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 12.2 percent, what is its fair present value? b. If the required rate of return on the stock is 15.2 percent, what should the fair value be four years from today? For all requirements, do not...
Need some help with this, thank you! A stock you are evaluating just paid an annual...
Need some help with this, thank you!
A stock you are evaluating just paid an annual dividend of $3.40. Dividends have grown at a constant rate of 2.1 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 13.5 percent, what is its fair present value? b. If the required rate of return on the stock is 16.5 percent, what should the fair value be four years...
A stock you are evaluating just paid an annual dividend of $2.30. Dividends have grown at...
A stock you are evaluating just paid an annual dividend of $2.30. Dividends have grown at a constant rate of 1.6 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 12.4 percent, what is its fair present value?b. If the required rate of return on the stock is 15.4 percent, what should the fair value be four years from today?
A stock you are evaluating just paid an annual dividend of $2.30. Dividends have grown at...
A stock you are evaluating just paid an annual dividend of $2.30. Dividends have grown at a constant rate of 1.6 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 12.4 percent, what is its fair present value?b. If the required rate of return on the stock is 15.4 percent, what should the fair value be four years from today?
You are evaluating a company’s stock. The stock just paid a dividend of $1.75. Dividends are...
You are evaluating a company’s stock. The stock just paid a dividend of $1.75. Dividends are expected to grow at a constant rate of 5 for long time into the future. The required rate of return (Rs) on the stock is 12 percent. What is the fair present value? Multiple Choice $26.25 $22.50 $35.26 $50.25 None of these choices are correct.
You are evaluating the purchase of Cool Toys, Inc. common stock that just paid a dividend...
You are evaluating the purchase of Cool Toys, Inc. common stock that just paid a dividend of $1.80. You expect the dividend to grow at a rate of 12%, indefinitely. You estimate that a required rate of return of 17.5% will be adequate compensation for this investment. Assuming that your analysis is correct, what is the most that you would be willing to pay for the common stock if you were to purchase it today?
A company just paid a dividend of $1.70 per share. You expect the dividend to grow...
A company just paid a dividend of $1.70 per share. You expect the dividend to grow 13% over the next year and 9% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 4% per year. If the required rate of return is 12% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)
This morning you purchased a stock that just paid an annual dividend of $1.70 per share.
This morning you purchased a stock that just paid an annual dividend of $1.70 per share. You require a return of 9.5 percent and the dividend will increase at an annual growth rate of 2.6 percent. If you sell this stock in three years, what will your capital gain be? Multiple Choice $2.31 $2.60 $2.02 $2.66 Fowler is expected to pay a dividend of $1.53 one year from today and $1.68 two years from today. The company has a dividend payout ratio of 45 percent and...
A stock you are evaluating just paid an annual dividend of
$3.00. Dividends have grown at a constant rate of 1.3 percent over
the last 15 years and you expect this to continue.
A stock you are evaluating just paid an annual dividend of $3.00. Dividends have grown at a constant rate of 1.3 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 13.1 percent, what...
A stock you are evaluating just paid an annual dividend of $2.10. Dividends have grown at a constant rate of 1.2 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 12.2 percent, what is its fair present value? b. If the required rate of return on the stock is 15.2 percent, what should the fair value be four years from today? For all requirements, do not...
Need some help with this, thank you!
A stock you are evaluating just paid an annual dividend of $3.40. Dividends have grown at a constant rate of 2.1 percent over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 13.5 percent, what is its fair present value? b. If the required rate of return on the stock is 16.5 percent, what should the fair value be four years...
You are evaluating the purchase of Cool Toys, Inc. common stock that just paid a dividend of $1.80. You expect the dividend to grow at a rate of 12%, indefinitely. You estimate that a required rate of return of 17.5% will be adequate compensation for this investment. Assuming that your analysis is correct, what is the most that you would be willing to pay for the common stock if you were to purchase it today?
Most questions answered within 3 hours.
-
3) What are the typical social structures in a global city?
asked 22 minutes ago -
Luther Corporation
Consolidated Balance Sheet
December 31, 2019 and 2018 (in $ millions)
Assets
2019
2018...
asked 24 minutes ago -
(Expected rate of return and risk) Carter Inc. is evaluating a
security. Calculate the investment’s expected...
asked 3 hours ago -
What specific indicators can point to lack of progress for
African Americans in American society?
asked 4 hours ago -
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 4 hours ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 4 hours ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 5 hours ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 5 hours ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 6 hours ago -
A .15kg rubber ball is bounced off a wall. Before hitting the
wall, the ball moves...
asked 7 hours ago -
A manufacturing company preparing to build a new plant is
considering three potential locations for it....
asked 7 hours ago -
B. If compound Y has approximately the same values of solubility
in toluene as compound X,...
asked 8 hours ago