Your company is estimated to make dividends payments of $2.9 next year, $3.5 the year after,...

Your company is estimated to make dividends payments of $2.9 next year, $3.5 the year after, and $4.4 in the year after that. The dividends will then grow at a constant rate of 5% per year. If the discount rate is 9% then what is the current stock price?

Expert Solution

Value after year 3=(D3*Growth rate)/(Discount rate-Growth rate)

=(4.4*1.05)/(0.09-0.05)

=$115.5

Hence current price=Future dividend and value*Present value of discounting factor(rate%,time period)

=2.9/1.09+3.5/1.09^2+4.4/1.09^3+115.5/1.09^3

=$98.19(Approx)

jeff jeffy answered 2 years ago

Your company is estimated to make dividends payments of $2 next year, $3.6 the year after,...

Your company is estimated to make dividends payments of $2 next year, $3.6 the year after, and $4.6 in the year after that. The dividends will then grow at a constant rate of 7% per year. If the discount rate is 11% then what is the current stock price?

Wonderland Corp. will pay a dividend of $3.5 next year. The company plans to maintain a...

Wonderland Corp. will pay a dividend of $3.5 next year. The company plans to maintain a constant growth rate of 5 percent a year forever. Investors’ required rate of return is 12 percent. Robinson Corp. will pay the following dividends over the next four years: $20, $18, $15 and $3. Afterwards the company pledges to maintain a constant 5 percent growth rate in dividends, forever. Investors’ required rate of return is 12 percent. Required: (a) How much will you pay...

You borrowed some money on a thirty-year mortgage at 3.5%, compounded monthly. Your payments are $950...

You borrowed some money on a thirty-year mortgage at 3.5%, compounded monthly. Your payments are $950 per month. How much will you pay in interest in the sixth year of this mortgage? Group of answer choices $6,565 $7,119 $7,299 $6,933 b) how much principal does the homeowner pay the first year? Group of answer choices $7,340 $4,060 $7,033 $4,835

Question 1 (20 marks) Wonderland Corp. will pay a dividend of $3.5 next year. The company...

Question 1 Wonderland Corp. will pay a dividend of $3.5 next year. The company plans tomaintain a constant growth rate of 5 percent a year forever. Investors’ required rate ofreturn is 12 percent. Robinson Corp. will pay the following dividends over the next four years: $20, $18, $15 and $3. Afterwards the company pledges to maintain a constant 5 percent growthrate in dividends, forever. Investors’ required rate of return is 12 percent. Required: (a) How much will you pay for...

A corporate pension plan has to make the following payments over the next few years: Year...

A corporate pension plan has to make the following payments over the next few years: Year 1 2 3 4 Amount ($ million) 16 20 26 34 The appropriate interest rate is 6%. 1. What is the present value of the liability (in $ million)? 2. What is the duration of the liability?

You plan to make contributions to your retirement account for the next 20 years. After the...

You plan to make contributions to your retirement account for the next 20 years. After the last contribution, you will retire and begin withdrawing $3000 each month, and you want the money to last an additional 20 years. Assume your account earns 8% interest compounded monthly. a.How much do you need to have saved in 20 years in order to withdraw according to plan? b) How much do you need to deposit into the savings account for the next 20...

a firm is expected to make four dividend payments of 1.30. Then dividends are expected to...

a firm is expected to make four dividend payments of 1.30. Then dividends are expected to stop for 2 periods. at that point the stock has a forecasted EPS of $24.40 and PE ratio of 11.2. if the required return of the stock is 15%, what is its intrinsic value? Answer is 106.52. Show step by step work please

A stocks next 2 dividends are as follows: $0.25 and $1.00. After that, the stock is...

A stocks next 2 dividends are as follows: $0.25 and $1.00. After that, the stock is expected to grow at a rate of 4% indefinitely. The required return on this stock is 16%. Compute its fair market value.

Q1) Last year, a company paid a dividend of $0.75 per share. Dividends for the next...

Q1) Last year, a company paid a dividend of $0.75 per share. Dividends for the next year, will increase by 167% and then by 50% in the following year. After that, dividends are expected to grow at a constant rate of 10% every year. If the required return for investments of similar risk is 15% and the market price of the stock is $55, would you buy the stock today? Explain your answer.

A manufacturing company has two Divisions: Amateur and Pro. Estimated activity for the next year is:...

A manufacturing company has two Divisions: Amateur and Pro. Estimated activity for the next year is: Amateur Pro Company Total Division Division (Amateur + Pro) Direct Labour hours: 9,000 hrs 1,000 hrs 10,000 hrs Maching Hours: 2,700 hrs 600 hrs 3,300 hrs Units Produced: 800 units 100 units 900 units Production Batches: 1 batch 49 batches 50 batches Costs: Labour: $144,000 Set-ups: $ 7,500 Machining: $ 33,000...

Question