Question

6. Marcel Co. is growing quickly. Dividends are expected to grow at a rate of 0.15 for the next 4 years, with the growth rate falling off to a constant 0.01 thereafter. If the required return is 0.15 and the company just paid a $0.53 dividend, what is the current share price? Answer with 2 decimals (e.g. 45.45).

7. Apocalyptica Corp. pays a constant $8.28 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever.  If the required return on this stock is 9 percent, what is the current share price? Answer with 2 decimals (e.g. 45.45).

8. The next dividend payment by Hot Wings, Inc., will be $3.70 per share. The dividends are anticipated to maintain a 0.05 growth rate forever. If the stock currently sells for $43 per share, what is the required return? Anser with 4 decimals (e.g. 0.1234)

9. Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $11.93 per share dividend in 8 years and will increase the dividend by 0.07 per year thereafter. If the required return on this stock is 0.08, what is the current share price? Answer with 2 decimals (e.g. 45.45).

Answer 1

6. Marcel Co. is growing quickly. Dividends are expected to grow at a rate of 0.15 for the next 4 years, with the growth rate falling off to a constant 0.01 thereafter. If the required return is 0.15 and the company just paid a $0.53 dividend, what is the current share price? Answer with 2 decimals (e.g. 45.45).

7. Apocalyptica Corp. pays a constant $8.28 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever.  If the required return on this stock is 9 percent, what is the current share price? Answer with 2 decimals (e.g. 45.45).

8. The next dividend payment by Hot Wings, Inc., will be $3.70 per share. The dividends are anticipated to maintain a 0.05 growth rate forever. If the stock currently sells for $43 per share, what is the required return? Anser with 4 decimals (e.g. 0.1234)

9. Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $11.93 per share dividend in 8 years and will increase the dividend by 0.07 per year thereafter. If the required return on this stock is 0.08, what is the current share price? Answer with 2 decimals (e.g. 45.45).