6. A stock has a required return of 14%, a constant growth rate of 9%, and...

6. A stock has a required return of 14%, a constant growth rate of 9%, and a retention rate of

50%. The stock’s price -earnings multiple (P/E) is most likely to be? Show your calculation.

Expert Solution

jeff jeffy answered 5 months ago

BETA AND REQUIRED RATE OF RETURN a. A stock has a required return of 9%; the...

BETA AND REQUIRED RATE OF RETURN a. A stock has a required return of 9%; the risk-free rate is 5%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is equal to 1.0, then the change in...

Constant Growth Stock Valuation Investors require a 14% rate of return on Brooks Sisters' stock (rs...

Constant Growth Stock Valuation Investors require a 14% rate of return on Brooks Sisters' stock (rs = 14%). What would the estimated value of Brooks' stock be if the previous dividend was D0 = $1.75 and if investors expect dividends to grow at a constant annual rate of (1) - 6%, (2) 0%, (3) 5%, or (4) 10%? Do not round intermediate calculations. Round your answers to the nearest cent. $ $ $ $ Using data from Part a, what...

Problem 9-12 Valuation of a constant growth stock Investors require a 18% rate of return on...

Problem 9-12 Valuation of a constant growth stock Investors require a 18% rate of return on Levine Company's stock (i.e., rs = 18%). What is its value if the previous dividend was D0 = $3.00 and investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 3%, or (4) 11%? Round your answers to two decimal places. (1) $ (2) $ (3) $ (4) $ Using data from part a, what would the Gordon...

1) A stock will pay constant dividends of $6 every year. Its required rate of return...

1) A stock will pay constant dividends of $6 every year. Its required rate of return (a.k.a., cost of capital, discount rate) is 23%. What is the value of the stock? Round to the penny. 2) A stock just paid a dividend of $7, and dividends will increase by 2% every year. Its required rate of return is 11%. What is the value of the stock? Round to the penny. 3) A stock will pay a dividend of $2 in...

Konkola Copper Mines’ required rate of return is 14% and the dividend growth is at a...

Konkola Copper Mines’ required rate of return is 14% and the dividend growth is at a rate of 25% for 4 years and then it dropped to a constant growth rate of 8% thereafter. The most recently paid dividend was K0.52. Find the value of the stock?

Assume that Techtron is a constant growth company with a required rate of return of 13...

Assume that Techtron is a constant growth company with a required rate of return of 13 percent whose last dividend (D0, which was paid yesterday) was $2.00, and whose dividend is expected to grow indefinitely at a 5 percent rate. a. What is the firm’s expected dividend stream over the next 3 years? b. What is the firm’s current stock price? c. What is the stock's expected value 1 year from now? d. What are the expected dividend yield, the...

A stock has a required return of 9%; the risk-free rate is 3%; and the market...

A stock has a required return of 9%; the risk-free rate is 3%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 8%, what would happen to the stock's required rate of return? Assume the risk-free rate and the beta remain unchanged. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the...

A stock has a required return of 13%, the risk-free rate is 6%, and the market...

A stock has a required return of 13%, the risk-free rate is 6%, and the market risk premium is 4%. What is the stock's beta? Round your answer to two decimal places. New stock's required rate of return will be

A stock has a constant dividend of $3.25 per year forever. Your required rate of return...

A stock has a constant dividend of $3.25 per year forever. Your required rate of return is 9%. How much would you pay today for this stock? A. $30.00 B. $36.11 C. $41.67 D. $52.40

Beta and required rate of return A stock has a required return of 12%; the risk-free...

Beta and required rate of return A stock has a required return of 12%; the risk-free rate is 2.5%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. B. If the market risk premium increased to 9%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. 1. If the stock's beta is equal to 1.0, then the change in...

Question