Suppose that you have just purchased a share of stock for $929. The most recent dividend...

Suppose that you have just purchased a share of stock for $929. The most recent dividend was $2.8 and dividends are expected to grow at a rate of 7% indefinitely. What must your required return be on the stock?

Expert Solution

jeff jeffy answered 2 years ago

You have just purchased a share of stock for $ 21.03, The company is expected to...

You have just purchased a share of stock for $ 21.03, The company is expected to pay a dividend of $ 0.65 per share in exactly one year. If you want to earn a 9.9 % return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $ (Round to the nearest cent.)

Compute the value of a share of common stock of a company whose most recent dividend...

Compute the value of a share of common stock of a company whose most recent dividend was $2.00 and is expected to grow at 6 percent per year for the next 2 years, after which the dividend growth rate will decrease to 3 percent per year indefinitely. Assume a 12 percent required rate of return.

Suppose that you just purchased 250 shares of Beta Banana’s stock for $70 per share. The...

Suppose that you just purchased 250 shares of Beta Banana’s stock for $70 per share. The initial margin requirement is 76.5%, which means the amount borrowed is $4,112. The corresponding balance sheet is below: Assets Liabilities and Equity Stock $17,500.00 Loan from broker $4,112.50 Equity $13,387.50 Total assets 17,500.00 Total liabilities and equity $17,500.00 a. Now suppose the price of the stock falls to $45 per share. What is your current margin percentage? (Round your answer to 2 decimal places.)...

A firm has just paid its most recent annual dividend of $10 per share, and commits...

A firm has just paid its most recent annual dividend of $10 per share, and commits to increase the dividend growing at a rate of 4.5% for the next five years. Afterwards, the dividend will growth at a rate of 3%. Applicable discount rate is 10%. What is the value of a share of this firm’s stock? A) $226.27 B) $153.50 C) $156.84 D) $150.01 E) $154.94

Suppose Powers Ltd. just issued a dividend of $2.55 per share on its common stock. The...

Suppose Powers Ltd. just issued a dividend of $2.55 per share on its common stock. The company paid dividends of $2.05, $2.12, $2.29, and $2.39 per share in the last four years. Required: What was the dividend growth rate for each year? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Growth rate Year 1 % Year 2 % Year 3 % Year 4 % What were the arithmetic and...

Suppose Hornsby Ltd. just issued a dividend of $2.55 per share on its common stock. The...

Suppose Hornsby Ltd. just issued a dividend of $2.55 per share on its common stock. The company paid dividends of $2.05, $2.12, $2.29, and $2.39 per share in the last four years. What was the dividend growth rate for each year? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Growth rate Year 1 % Year 2 % Year 3 % Year 4 % What were the arithmetic and geometric...

Suppose Hornsby Ltd. just issued a dividend of $2.48 per share on its common stock. The...

Suppose Hornsby Ltd. just issued a dividend of $2.48 per share on its common stock. The company paid dividends of $1.98, $2.05, $2.22, and $2.32 per share in the last four years. If the stock currently sells for $67, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity...

Suppose Potter Ltd. just issued a dividend of $2.51 per share on its common stock. The...

Suppose Potter Ltd. just issued a dividend of $2.51 per share on its common stock. The company paid dividends of $2.01, $2.08, $2.25, and $2.35 per share in the last four years. What was the dividend growth rate for each year? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) What were the arithmetic average and geometric average dividend growth rates over the past four years? (Do not round intermediate...

Suppose Potter Ltd. just issued a dividend of $2.50 per share on its common stock. The...

Suppose Potter Ltd. just issued a dividend of $2.50 per share on its common stock. The company paid dividends of $2.00, $2.07, $2.24, and $2.34 per share in the last four years. If the stock currently sells for $69, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates?

Management action and stock value REH Corporation's most recent dividend was $1.72 per share, its expected...

Management action and stock value REH Corporation's most recent dividend was $1.72 per share, its expected annual rate of dividend growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine the impact on share price for each of the following proposed actions. a. Do nothing, which will leave the key financial variables unchanged. b. Invest in a new machine that will increase the dividend growth...

Question