A company is growing at a constant rate of 8 percent. Last week it paid a...

A company is growing at a constant rate of 8 percent. Last week it paid a dividend of $3.00. If the required rate of return is 15 percent, what is the price of the share three years from now?

	a.	$42.83.
	b.	$46.29.
	c.	$58.31.
	d.	$51.02.
	e.	$48.30.

Expert Solution

D₀ = $3.00

D₄ = 3.00(1.08)⁴ = $4.08

Stock Price in Year 3 = D₄/(r - g)

Stock Price in year 3 = 4.08/(0.15 - 0.08)

Stock Price in Year 3 = $58.31

jeff jeffy answered 2 years ago

A company’s dividend grows at a constant rate of 4 percent p.a.. Last week it paid...

A company’s dividend grows at a constant rate of 4 percent p.a.. Last week it paid a dividend of $6.83. If the required rate of return is 15 percent p.a., what is the price of the share 4 years from now? (round to nearest cent) Select one: a. $75.54 b. $72.64 c. $43.19 d. $112.94

Assume the last dividend was $1.15 and the company is growing at a constant rate of...

Assume the last dividend was $1.15 and the company is growing at a constant rate of 7% per year. Investors require 13% to invest in this company. What is the capital gains yield for the first year?

The last dividend paid by Klein Company was $1.00. Klein's growth rate is expected to be a constant 8 percent for 2 years, after which dividends are expected to grow at a rate of 6 percent forever.

The last dividend paid by Klein Company was $1.00. Klein's growth rate is expected to be a constant 8 percent for 2 years, after which dividends are expected to grow at a rate of 6 percent forever. Klein's required rate of return on equity (rs) is 12 percent. What is the current price of Klein's common stock?

The FCF of company ABC is growing at a constant rate 8%. FCF0 = $25 million....

The FCF of company ABC is growing at a constant rate 8%. FCF0 = $25 million. The weighted average cost of capital (WACC) for this company is 18%. This company has a short-term investment of $7 million, debt $12 million and preferred stock of $1 million. The number of shares outstanding is 10 million. How much is the stock price according to the FCFF valuation model? 2. Company XYZ has the following FCF: Year 1 D1 = $ 0.5 Year...

1a. The last dividend Company X paid was $ 5 and the constant growth rate of...

1a. The last dividend Company X paid was $ 5 and the constant growth rate of dividends is 2%. The current price of this stock is $20 per share. What is the required rate of return (yield) on that stock? A 27.5% B 15% C 8% D 35% 1b. Your first investment is Stock A. 3 years ago you bought Stock A from $20 and sold it now at $25. Over the three years you received a cash dividend of...

Non-constant Growth Stock The last dividend paid by Company A was $2.20. Its growth rate is...

Non-constant Growth Stock The last dividend paid by Company A was $2.20. Its growth rate is expected to be 10 percent for three years, after which dividends are expected to grow at a rate of 6 percent forever. The company’s stockholders require a rate of return on equity of 11.5 percent. a. Draw a clear and accurate timeline of the expected cash flows. (The timeline should consist of time periods (t = 0, 1, 2, . . .), the cash...

7.7 Constant growth: Maurica Ltd is a consumer products company growing at a constant rate of...

7.7 Constant growth: Maurica Ltd is a consumer products company growing at a constant rate of 6.5 per cent. The company’s last dividend was $3.36. If the required rate of return was 14 per cent, what is the market value of this share?

Trump Office Supplies paid a $10 dividend last year. The dividend is expected to grow at a constant rate of 9 percent over the next four years.

Trump Office Supplies paid a $10 dividend last year. The dividend is expected to grow at a constant rate of 9 percent over the next four years. The required rate of return is 17 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the anticipated value of the dividends for the next four years. (Do...

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 4 percent thereafter

S08-18 Supernormal Growth [LO1]Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 4 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $2.45, 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=

A share currently sells for $14 a share. Its dividend is growing at a constant rate, and its dividend yield is 7 percent.

A share currently sells for $14 a share. Its dividend is growing at a constant rate, and its dividend yield is 7 percent. The required rate of return on the company’s share is expected to remain constant at 14 percent per year. What is the expected share price (to the nearest dollar) five years from now?

Question