Question
In: Finance
CX Enterprises has the following expected dividends: $1.12 in one year, $1.18 in two years, and...
CX Enterprises has the following expected dividends: $1.12 in one year, $1.18 in two years, and $1.33 in three years. After that, its dividends are expected to grow at 4.3% per year forever (so that year 4's dividend will be 4.3% more than $1.33 and so on). If CX's equity cost of capital is 11.7%, what is the current price of its stock?
Solutions
Expert Solution
D1 = $1.12
D2 = $1.18
D3 = $1.33
D4 = D3 * (1 + g) = $1.33 * (1 + 0.043) = $1.39
P3 = D4/(r-g) = $1.39/(0.117-0.043) = $1.39/0.074 = $18.75
P0 = [D1/(1+r)] + [D2/(1+r)2] + [(D3+P3)/(1+r)3]
= [$1.12/(1+0.117)] + [$1.18/(1+0.117)2] + [($1.33+$18.75)/(1+0.117)3]
= $1.00 + $0.95 + $14.41
= $16.35
jeff jeffy answered 2 years agoRelated Solutions
CX Enterprises has the following expected dividends: $1.15 in one year, $1.24 in two years, and...
CX Enterprises has the following expected dividends: $1.15 in
one year, $1.24 in two years, and $1.32 in three years. After
that, its dividends are expected to grow at 4.1% per year forever
(so that year 4's dividend will be 4.1% more than $1.32 and so
on). If CX's equity cost of capital is 11.7%, what is the current
price of its stock?
The price of the stock will be $
CX Enterprises has the following expected dividends: $ 1.13 in one year, $ 1.24 in two...
CX Enterprises has the following expected dividends: $ 1.13 in
one year, $ 1.24 in two years, and $ 1.32 in three years. After
that, its dividends are expected to grow at 4.5 % per year forever
(so that year 4's dividend will be 4.5 % more than $ 1.32 and so
on). If CX's equity cost of capital is 12.1 %, what is the
current price of its stock?
CYZ Enterprises has the following expected dividends: $1.02 inone year, $1.21 in two years, and...
CYZ Enterprises has the following expected dividends: $1.02 in
one year, $1.21 in two years, and $1.32 in three years. After that,
its dividends are expected to grow at 3.9% per year forever (so
that year 4's dividend will be 3.9% more than $1.32 and so on). If
CYZ's equity cost of capital is 11.7%, what is the current price of
its stock?The price of the stock will be ________
You expect that Walmart will pay dividends 1.5 in one year, 2.8 in two years and...
You expect that Walmart will pay dividends 1.5 in one year, 2.8
in two years and 4.9 in three years. After that dividends will grow
at 3.4% per year and investors required rate of return is 7.3%.
According to the dividend discount model what should be the price
of Walmarts stocks?
The stock of Sedly Inc. is expected to paythe following dividends. Dividends: Year 1: $2.25 year...
The stock of Sedly Inc. is expected to paythe following
dividends. Dividends: Year 1: $2.25 year 2: $3.60 year 3: $1.70 .
year 4: $2.00 At the end of the fourth year its value is expected
to be $37.70. What should Sedly sell for today if the return on
stocks of similar risk is 11.924%? Round PVF values in intermediate
calcualtions to four decimal places. Round the answer to two
decimal places.
Suppose a firm is expected to increase dividends by 10% in one year and by 15%...
Suppose a firm is expected to increase dividends by 10% in one
year and by 15% in year two. After that, dividends will increase at
a rate of 7% per year indefinitely. If the last dividend was $2 and
the required return is 12%, what is the price of the stock?
Suppose a firm is expected to increase dividends by 5% in one year and by 10%...
Suppose a firm is expected to increase dividends by 5% in one
year and by 10% in year two. After that, dividends will increase at
a rate of 4% per year indefinitely. If the last dividend was $4 and
the required return is 10%, what is the price of the stock?
Suppose a firm is expected to increase dividends by 10% in one year and by 15%...
Suppose a firm is expected to increase dividends by 10% in one
year and by 15% in year two. After that, dividends will increase at
a rate of 7% per year indefinitely. If the last dividend was $2 and
the required return is 12%, what is the price of the stock?
Todd’s Turtles is expected to increase dividends by 20% in one year and by 15% in...
Todd’s Turtles is expected to increase dividends by 20% in one
year and by 15% in two years. After that, dividends will increase
at a rate of 5% per year indefinitely. The last dividend was $1,
the required return is 12%, what is the current price of the stock?
A. $6.90 B. $8.67 C. $10.10 D. $13.72 E. $13.04
thanks
11. Suppose a firm is expected to increase dividends by 10% in one year and by...
11. Suppose a firm is expected to increase dividends by 10% in
one year and by 15% in two years. After that, dividends will
increase at a rate of 6% per year indefinitely. If the current
dividend is $1.05 and the required return is 7.5%, what is the
price of the stock?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What are the six steps of hypothesis testing? What does it mean if we reject the...
- Consider the following network of a project consisting of 7 activities with a scheduled project duration...
- In 1941, President Roosevelt spoke about the “four freedoms.” For many in the country, however, these...
- Your friend is looking for investors in a risky business venture. To convince you to participate,...
- Suppose you observe the following situation: State of Economy Probability of State Return if State Occurs...
- Merger Analysis TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia...
- Journal Entries and Trial Balance Elite Realty acts as an agent in buying, selling, renting, and...
ADVERTISEMENT