ZuoTi.Pro
Question

Jiffy Co. expects to pay a dividend of $3.25 per share in one year. The current price of Jiffy common stock is $54.50 per sha

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Cost of internal equity=(D1/Current price)+Growth rate

=[(3.25/54.5)]+0.0475

which is equal to

=10.71%(Approx).

0 0
Add a comment
Know the answer?
Add Answer to:
Jiffy Co. expects to pay a dividend of $3.25 per share in one year. The current...
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

  • Saccar Inc. expects to pay a dividend of $1.83 per share in one year. The current...

    Saccar Inc. expects to pay a dividend of $1.83 per share in one year. The current price of Saccar common stock is $30.04 per share. Flotation costs are $2.36 per share when the corporation issues new stock. What is the cost of internal common equity (retained earnings) if the long-term growth in dividends is projected to be 4 percent indefinitely? Submit your answer as a percentage and round to two decimal places (Ex. 0.00%) Cantink Corporation plans to issue new...

  • Triangular Co. will pay a dividend of $3.25 per share, today. The company will continue to...

    Triangular Co. will pay a dividend of $3.25 per share, today. The company will continue to pay dividends on a yearly basis, and increase its dividend by 12 percent per year for the next 5 years. After that, the expected dividend growth rate will be negative 3 percent per year forever. If the required return on Triangular stock is 8 percent, and a stock’s share price is equal to the PV of all remaining dividend payments, what will a share...

  • You are required to show the following 3 steps for each problem (sample questions and solutions...

    You are required to show the following 3 steps for each problem (sample questions and solutions are provided for guidance): (i) Describe and interpret the assumptions related to the problem. (ii) Apply the appropriate mathematical model to solve the problem. (iii) Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places. QUESTION : Raven Co. expects to pay a dividend of $3.15 per share in one year. The current price of their...

  • Triangular Co. will pay a dividend of $3.25 per share, today. The company will continue to...

    Triangular Co. will pay a dividend of $3.25 per share, today. The company will continue to pay dividends on a yearly basis, and increase its dividend by 12 percent per year for the next 5 years. After that, the expected dividend growth rate will be negative 3 percent per year forever. If the required return on Triangular stock is 8 percent, and a stock’s share price is equal to the PV of all remainingdividend payments, what will a share of...

  • Please show steps 5. The Chilton Oil Co. just issued a dividend of $3.50 per share...

    Please show steps 5. The Chilton Oil Co. just issued a dividend of $3.50 per share on its common stock. The company is expected to maintain a constant 7 percent growth rate in its dividends indefinitely. If the stock sells for $74 a share, what is the company's cost of existing common equity? If the company issued new stock, it would incur a 10% flotation cost. What would be the company's cost of new common equity?

  • Poulter Corporation will pay a dividend of $3.25 per share next year. The company pledges to...

    Poulter Corporation will pay a dividend of $3.25 per share next year. The company pledges to increase its dividend by 5.1 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company’s stock today?

  • A stock expects to pay a dividend of $3.72 per share next year. The dividend is...

    A stock expects to pay a dividend of $3.72 per share next year. The dividend is expected to grow at 25 percent per year for three years followed by a constant dividend growth rate of 4 percent per year in perpetuity. What is the expected stock price per share 5 years from today, if the required return is 12 percent?

  • 8, The Drogon Co. just issued a dividend of $2.11 per share on its common stock....

    8, The Drogon Co. just issued a dividend of $2.11 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, what is the company's cost of equity?

  • Problem 1: A corporation will pay a $1.00 dividend (D1) in the next 12 months on a share of common stock. The required r...

    Problem 1: A corporation will pay a $1.00 dividend (D1) in the next 12 months on a share of common stock. The required rate of return is 5% and the constant growth rate is 4%. Compute the theoretical stock price. Problem 2: A corporation expects to pay dividends (D1) of $1.75 per share at the end of the current year and the current price of its common stock is $30 per share. The expected growth rate is 3.5% and flotation...

  • Company A will pay a dividend of €1.30 per share today. The dividend per share is...

    Company A will pay a dividend of €1.30 per share today. The dividend per share is expected to be €1.365 next year. The rate of return required by equity investors is 14.78% and the value of the stock today is estimated at €13.96 according to the Dividend Discount Model in stable growth. What is the long-term rate of growth of dividends implied in this valuation?

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