A stock just paid a dividend of D0 =
$8.50. The required rate of return is rs...
A stock just paid a dividend of D0 =
$8.50. The required rate of return is rs =
12.3%, and the constant growth rateis g
=6.0%. What is the stock’s intrinsic
value?
Solutions
Expert Solution
The value is computed as follows:
= [ D0 x (1 + growth rate) ] / (required rate of return
- growth rate)
A stock just paid a dividend of $1.23 how is it required rate of
return of 10.7% and a constant dividend growth rate of 2.8% what
return Will you earn if you buy the stock today and sell it after
the next dividend assume the returns and growth rate remains
The Holding Period return is:
a 5.3%
b 8.5%
c 11.7%
D 10.6%
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Dividend is expected to grow at a constant rate of 3.2%. The
required rate of return is 15.7%. What is the current stock
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2. XYZ stock is currently selling for $40.35 per share. The
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3. Stock Valuation
A company’s stock just paid a dividend (D0) of $3.50 and the
stock’s dividends are expected to grow at a constant rate of 4.0%
per year. The stock has a beta of 1.2, the risk-free rate is 2%,
and the market risk premium is 7%.
a. Is this stock more or less risky than the market? Why?
b. Use the CAPM to compute the cost of equity/required return
for the stock (rs)?
c. Use the constant-growth dividend...
You have the opportunity to buy a stock that just paid a
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have forecasted the following growth rates for the firm’s
dividends:
g1 =
-40%
g2 = 0%
g3 =
50%
g4 =
25%
g5-infinity = 3%
In addition, you estimate that the required return for this
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Calculate the forecasted stock price for year...
You are planning to buy a stock that has just paid a dividend
(D0) of $2.50. In addition, you anticipate the following dividend
growth rates:
• Year 1 = 100%
• Year 2 = 0%
• Year 3 = -30% (note this is NEGATIVE 30%)
• Year 4 = 20%
• Years 5 through infinity = 4%
Assume a discount rate of 10%. Based on this, what is the value of
the stock today? (Hint: use the three-step process of...
C. Problem:
Stock C just paid a dividend of $2. The required return is
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are:
a. 0%
b. 5%
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for year 1 to year 2, 10% for year 2 to year 3; the growth rate of
dividend is constant, gL= 5%...
Bozo Inc. just paid an annual dividend of $1.50 per share, and the required return for this stock is 15%. A. Calculate Bozo's stock value with the following assumptions A. No dividend growth B. A constant growth of 5% C. A constant growth of 10% D. A constant growth of 5% and a requiredi return of 10%
Quantitative Problem 1: Hubbard Industries just
paid a common dividend, D0, of $1.90. It expects to grow
at a constant rate of 4% per year. If investors require a 8% return
on equity, what is the current price of Hubbard's common stock? Do
not round intermediate calculations. Round your answer to the
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case of a zero growth stock, where the dividend is expected to
remain constant...
Schnusenberg Corporation just paid a dividend of D0 = $0.75 per
share, and that dividend is expected to grow at a constant rate of
7% per year in the future. The company's beta is 1.25, the required
return on the market is 10.50%, and the risk-free rate is 4.50%.
What is the company's current stock price?