Question

In: Finance

Can you do in Excel Please Dominion Resources (D) has just paid a dividend this past...

Can you do in Excel Please

Dominion Resources (D) has just paid a dividend this past year of $2.50. Dividends are expected to grow at a constant rate of 6% each year in the future. The required market return for Dominion stock is 9.75%.

As soon as the dividend was paid; however, the Dominion Board of Directors decided to finance a large new project by reducing the rate of dividend growth to 2% for the next five years. The project has similar risk to existing projects in the company (the required return will remain at 9.75%), and it is expected that higher dividend increases will begin again in year six. The year six dividend is expected to increase by 7.5% and continue to grow at that rate each year into the future.

a. Using the dividend growth model, calculate the price of the Dominion stock prior to the board's decision.

Price = _____

b. What will be the price of Dominion stock under the new conditions?

Price = _____

c. Do you believe that the board has made a good decision given these estimates?

d. What is the expected total rate of return for the stock in year 1 from question b above? What is the expected capital gains yield and dividend yield?

CGY= _______

DY = _______

Total Return _______

e. After year 5, what will the company’s expected total rate of return, capital gains yield and dividend yield be from question b above?

CGY= _______

DY = _______

Total Return _______

Can you do in Excel Please

Expert Solution

jeff jeffy answered 1 year ago

Please show how it would be done on EXCEL gilmore, Inc., just paid a dividend of...

Please show how it would be done on EXCEL gilmore, Inc., just paid a dividend of $2.35 per share on its stock. The dividends are expected to grow at a constant rate of 4.1 percent per year, indefinitely. If investors require a return of 10.4 percent on this stock. What is the current price? What will the price be in three years? and in fifteen years?

Burke Tires just paid a dividend of D 0 = $1.32. Analysts expect the company's dividend...

Burke Tires just paid a dividend of D 0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value? a. $53.75 b. $52.65 c. $59.30 d. $51.59

Best Buy has just paid a dividend of $4 per share (this dividend is already paid...

Best Buy has just paid a dividend of $4 per share (this dividend is already paid therefore it is not included in the current price). The companys dividend is estimated to grow at a rate of 35% in year 1 and 20% in year 2. The dividend is then expected to grow at a constant rate of 3.2% thereafter. The companys opportunity cost of capital is 12% what is the current value of Best Buy stock?

Microsoft has just paid a dividend of $1 per share (this dividend is already paid sometimes...

Microsoft has just paid a dividend of $1 per share (this dividend is already paid sometimes called Dividend 0). It is estimated that the companys dividend will grow at a rate of 35% in year 1 and 20% in year 2. The dividend is then expected to grow at a constant rate of 1% thereafter. The companys opportunity cost of capital is 11% what is an estimate Microsofts stock using the nonconstant growth technique?

Please show your work A company just paid a dividend of $6 and expects the dividend...

Please show your work A company just paid a dividend of $6 and expects the dividend to decrease 10% this year, decrease 20% next year and then grow at a constant rate of 5% thereafter. If your required rate of return for the company is 10%, what is the per share value today? A. $74.50 B. $76.25 C. $78.22 D. $80.14 E. $83.45

A company just paid a dividend of $1.53 per share and you expect the dividend to...

A company just paid a dividend of $1.53 per share and you expect the dividend to grow at a constant rate of 5.6% per year indefinitely into the future. If the required rate of return is 13.4% per year, what would be a fair price for this stock today? (Answer to the nearest penny per share.)

A company just paid a dividend of $0.79 per share and you expect the dividend to...

A company just paid a dividend of $0.79 per share and you expect the dividend to grow at a constant rate of 5.2% per year indefinitely into the future. If the required rate of return is 12.4% per year, what would be a fair price for this stock today? (Answer to the nearest penny per share.) A 6.4% coupon bearing bond pays interest semi-annually and has a maturity of 6 years. If the current price of the bond is $1,023.87,...

Stoneworks, Inc., has an odd dividend policy. The company has just paid a dividend of $15...

Stoneworks, Inc., has an odd dividend policy. The company has just paid a dividend of $15 per share and has announced that it will increase the dividend by $3 per share for each of the next five years, and then never pay another dividend. If you require a return of 11 percent on the company’s stock, how much will you pay for a share today?

JustKidding Corporation has an odd dividend policy. The company has just paid a dividend of $9...

JustKidding Corporation has an odd dividend policy. The company has just paid a dividend of $9 per share and has announced that it will increase the dividend by $4 per share for each of the next five years, and then never pay another dividend. If you require a return of 10 percent on the company’s stock, how much will you pay for a share today?

Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $4...

Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $4 per share and has announced that it will increase the dividend by $6 per share for each of the next five years, and then never pay another dividend. If you require a return of 14 percent on the company’s stock, how much will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)