Assume that you have a stock that pays a dividend of 4 dollars one year from...

Assume that you have a stock that pays a dividend of 4 dollars one year from today, a dividend of 4.50 dollars two years from today, and a cash flow (dividend plus sale price) of 35 dollars three years from today. Assume the discount rate is 10%. Find the present value of these cash flows (i.e., price of the stock).

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jeff jeffy answered 2 years ago

What is the value of a stock which pays a $4 dividend/year (first dividend in one...

What is the value of a stock which pays a $4 dividend/year (first dividend in one year), not growing until year 10, then growing at 5% per year from year 10 to 11 and every year thereafter, if the discount rate is 10%?

A stock costs $80 and pays a $4 dividend each year for three years. a) If...

A stock costs $80 and pays a $4 dividend each year for three years. a) If an investor buys the stock for $80 and expects to sell it for $100 after three years, what is the anticipated annual rate of return? b) What would be the rate of return if the purchase price were $60? c) What would be the rate of return if the dividend were $1 annually and the purchase price were $80 and the sale price were...

A firm pays a $2.50 dividend at the end of year one (D1), has a stock...

A firm pays a $2.50 dividend at the end of year one (D1), has a stock price of $98 (P0), and a constant growth rate (g) of 7 percent. a. Compute the required rate of return (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) rate of return Indicate whether each of the following changes will increase or decrease the required rate of return (Ke). (Each question is separate from the others....

Consider a stock that currently pays a dividend of $0.85 a share. You have a required...

Consider a stock that currently pays a dividend of $0.85 a share. You have a required return on equities of 10%. a) If you expect the dividend to grow at a rate of 4% a year, what price would you place on the stock using the Gordon grown model? b) You are considering just holding the stock for one year. If you think the dividend next year will be 4% larger than the current dividend and the price next year...

A firm's preferred stock pays an annual dividend of $4, and the stock sells for $72.

Q4A firm's preferred stock pays an annual dividend of $4, and the stock sells for $72. Flotation costs for new issuances of preferred stock are 7% of the stock value. What is the after-tax cost of preferred stock if the firm's tax rate is 39%? (Round your answer to 2 decimal places.)Q5A firm is paying an annual dividend of $5.00 for its preferred stock which is selling for $67.00. There is a selling cost of $3.00. What is the after-tax...

2. Consider a stock that pays no dividend trading at $100. Suppose one-year call options with...

2. Consider a stock that pays no dividend trading at $100. Suppose one-year call options with strike prices of $95, $100, $105, and $110 can be bought for a premiums of $16.41, $12, $9, and $7.24 respectively. Suppose the annual effective interest rate is 5% (i.e., a $100 bond pays $105 one year from now). a) What are the values of one-year puts with strike prices corresponding to those listed for the call options above? b) Suppose you wished to...

A stock pays a dividend of $50 at the end of the first year, with each...

A stock pays a dividend of $50 at the end of the first year, with each subsequent annual dividend being 5% greater than the preceding one. Mandy buys the stock at a price to earn effective annual yield of 10%. Immediately after receiving the 10th dividend, Mandy sells the stock for a price of P. Her effective annual yield over the 10-year period was 8%. Calculate P. (Answer $1,275.54)

Assume you have a saving account that pays 4% APR. If you have a beginning balance...

Assume you have a saving account that pays 4% APR. If you have a beginning balance of$6000, How much do you need to save on a monthly basis in a saving account (add to your saving account) to have a down payment of $20000 for a house in 5 years

Assume that stock J is priced at 94 shares and pays a dividend of 0.7/ share....

Assume that stock J is priced at 94 shares and pays a dividend of 0.7/ share. An investor the stock at margin 50% and borrowing the remainder from the broker at 10%.If after one year, the stock is sold at a price of $132 share, what is the return to the investment.

You are considering a stock A that pays a dividend of $1. The beta coefficient of...

You are considering a stock A that pays a dividend of $1. The beta coefficient of A is 1.3. The risk free return is 6%, while the market average return is 13%. a.What is the required return for Stock A? b. If A is selling for $10 a share, is it a good buy if you expect earnings and dividends to grow at 6%?

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