In: Finance
CHAPTER 8-21
Nonconstant Growth Stock Valuation
Conroy Consulting Corporation (CCC) has been growing at a rate...
CHAPTER 8-21
Nonconstant Growth Stock Valuation
Conroy Consulting Corporation (CCC) has been growing at a rate
of 20% per year in recent years. This same non-constant growth rate
is expected to last for another 2 years (g0,1 =
g1,2 = 20%).
- If D0= $1.00, rs= 8% and gL =
7%, then what is CCC's stock worth today? Round your answer to the
nearest cent. Do not round your intermediate computations.
$ _______
What is its expected dividend yield at this time? Round the answer
to two decimal places. Do not round your intermediate
computations.
_______ %
What is its capital gains yields at this time? Round the answer to
two decimal places. Do not round your intermediate
computations.
_______ %
- What will CCC's dividend yield and capital gains yield be once
its period of supernormal growth ends? (Hint: These values
will be the same regardless of whether you examine the case of 2 or
5 years of supernormal growth, and the calculations are very easy.)
Round the answers to two decimal places. Do not round your
intermediate computations.
Dividend yield |
_______% |
Capital gains yield |
_______% |