Question
In: Finance
Johnson Products earned $4.30 per share last year and paid a dividend of $1.65 per share....
Johnson Products earned $4.30 per share last year and paid a dividend of $1.65 per share. If ROE was 16 percent, what is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Sustanable growth rate:
Solutions
Expert Solution
Sustainable growth rate = ROE * (1 - Dividend Payout Ratio)
Dividend Payout Ratio = Dividend/Earnings
Dividend payout ratio = $1.65/$4.30 = 0.3837
Sustainable growth rate = 16% * (1 - 0.3837) = 16% * 0.6163 = 9.86%
jeff jeffy answered 2 years agoRelated Solutions
Johnson Products earned $4.30 per share last year and paid a dividend of $1.65 per share....
Johnson Products earned $4.30 per share last year and paid a
dividend of $1.65 per share. If ROE was 16 percent, what is the
sustainable growth rate?
TechSvx earned $5.00 per share and paid a $4.00 dividend per share last year, and is...
TechSvx earned $5.00 per share and paid a $4.00 dividend per
share last year, and is expected to continue to pay out 80% of its
earnings as dividends for the foreseeable future. The firm is
expected to generate a 14% return on equity in the future, and you
require a 15% return on the stock.
a. What should be the value of the stock today (according to the
constant growth rate dividend discount model)?
b. What should be the value...
The Baron Basketball Company (BBC) earned $9 a share last year and paid a dividend of...
The Baron Basketball Company (BBC) earned $9 a share last year
and paid a dividend of $6 a share. Next year, you expect BBC to
earn $10 and continue its payout ratio. Assume that you expect to
sell the stock for $140 a year from now. Do not round intermediate
calculations. Round your answers to the nearest cent.
If you require 10 percent on this stock, how much would you be
willing to pay for it? $
If you expect...
Schlumberger is selling for $64.91 per share and paid a dividend of $1.10 last year.
(Common stock valuation) Schlumberger is selling for
$64.91 per share and paid a dividend of $1.10 last year. The
dividend is expected to grow at 4 percent indefinitely. What is the
stock’s expected rate of return?
The stock of AMD Graphics Co. paid a dividend of $0.6 per share last year on...
The stock of AMD Graphics Co. paid a dividend of $0.6 per share
last year on earnings of $1.00 per share. The firm’s dividends and
earnings are expected to growth at 7% per year forever.
Shareholders require a return of 10% on their investment. Assuming
the payout ratio is constant, the justified leading P/E ratio
is:
a. 20.0
b. 12.0
c. 12.8
d. 9.0
e. 8.6
Q1) Last year, a company paid a dividend of $0.75 per share. Dividends for the next...
Q1) Last year, a company paid a dividend of $0.75 per share.
Dividends for the next year, will increase by 167% and then by 50%
in the following year. After that, dividends are expected to grow
at a constant rate of 10% every year. If the required return for
investments of similar risk is 15% and the market price of the
stock is $55, would you buy the stock today? Explain your
answer.
Amco Pty Ltd last paid a dividend of $0.20 per share. This dividend is expected to...
Amco Pty Ltd last paid a dividend of $0.20 per share. This
dividend is expected to grow at 15% per annum for three years, then
at 10% per annum for the next three years, after which it is
expected to grow at a 5% rate forever.
a. What is the price you would pay for the share if your
required rate of return is 10%?
b. Would the price change if you expected to hold the share
for only three...
Last year, Wilderness Adventures paid an annual dividend of $3.70 per share. The firm recently announced...
Last year, Wilderness Adventures paid an annual dividend of
$3.70 per share. The firm recently announced that it will increase
its dividend by a constant 12.5 percent annually. What is one share
of this stock worth today at a required rate of 17.8 percent?
$78.05
$79.63
$78.54
$79.75
Excelor stock is expected to pay $2.80 per share as its next
annual dividend. The firm has a policy of increasing the dividend
by 10.0 percent annually. The stock has a market...
A company’s last dividend was $1.50 per share at the end of the year. For the...
A company’s last dividend was $1.50 per share at the end of the
year. For the next three years, the growth rate is expected to be
23% per year, after which the growth rate is expected to continue
at a constant rate of 7% per share. Shareholders require 12% rate
of return. What would you be willing to pay for this stock today?
Show the answer by hand not using excel.
2A. Firm ABC paid an annual dividend of $2.00 per share last year. Management just announced...
2A. Firm ABC paid an annual dividend of $2.00 per share last year. Management just announced that future dividends will increase by 2 percent annually. What is the amount of the expected dividend in year 5? 2B. Firm ABC is going to pay an annual dividend of $2.00 per share next year. Management just announced that future dividends will increase by 2 percent annually. What is the amount of the expected dividend in year 5? 2C. Firm ABC is going to pay...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Suppose Rialto is the only movie cinema in a small college town, so it is essentially...
- With VMI, members of the supply chain share planning, demand, forecasting, and inventory information.
- Large lots are desirable in supply chain coordination despite increasing holding costs.
- ***Convert the C++ to Python*** #include <iostream> using std::cout; using std::cin; using std::endl; int charClass; char...
- Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a...
- The following costs were incurred for the single product produced during the first year of operations...
- Non-constant growth model: Do=$2.00 required return on equity= 5% g= 9% n=1,2 g=7% n=3,4 g=3% n=5...
ADVERTISEMENT