Question
In: Finance
Assume that a company just paid a dividend of $2 per share. The expected growth rate...
Assume that a company just paid a dividend of $2 per share. The expected growth rate in the dividend is a constant 10%. If your required rate of return for the stock is 15%, what is the value of the stock to you today?
Solutions
Expert Solution
| Stock price = D1 / r - g |
| Where, |
| D1 = Expected Dividend =$2*1.10 =2.20 |
| r= required rate of return |
| g= growth rate |
| =2.2/0.15-0.1 |
| = $44 |
jeff jeffy answered 2 years agoRelated Solutions
A company just paid a $2 dividend per share. The dividend growth rate is expected to...
A company just paid a $2 dividend per share. The dividend growth
rate is expected to be 10% for each of the next 2 years, after
which dividends are expected to grow at a rate of 3% forever. If
the company’s required return (rs) is 11%, what is its
current stock price?
The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected...
The Duo Growth Company just paid a dividend of $1.00 per share.
The dividend is expected to grow at a rate of 23% per year for the
next three years and then to level off to 5% per year forever. You
think the appropriate market capitalization rate is 18% per
year.
a. What is your estimate of the intrinsic value
of a share of the stock? (Use intermediate calculations
rounded to 4 decimal places. Round your answer to 2 decimal...
The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected...
The Duo Growth Company just paid a dividend of $1.00 per share.
The dividend is expected to grow at a rate of 22% per year for the
next three years and then to level off to 5% per year forever. You
think the appropriate market capitalization rate is 17% per
year.
a. What is your estimate of the intrinsic value
of a share of the stock? (Do not round intermediate
calculations. Round your final answer to 2 decimal
places.)
b....
The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected...
The Duo Growth Company just paid a dividend of $1 per share. The
dividend is expected to grow at a constant rate of 10% per year
forever. The stock has a beta of 1.25 and the risk- ree rate is 7%,
while the expected rate of return of the whole market is 12%.
a) What is the required rate of return on the Duo Growth
stock
b) What is your estimate of the intrinsic value of a share of
the...
The Duo Growth Company just paid a dividend of $1.2 per share. The dividend is expected...
The Duo Growth Company just paid a dividend of $1.2 per share.
The dividend is expected to grow at a rate of 24% per year for the
next 3 years and then to level off to 6% per year forever. You
think the appropriate market capitalization rate is 21% per
year.
a. What is your estimate of the intrinsic value of a share of
the stock?
b. If the market price of a share is equal to this intrinsic
value,...
The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected...
The Duo Growth Company just paid a dividend of $1.00 per share.
The dividend is expected to grow at a rate of 21% per year for the
next three years and then to level off to 5% per year forever. You
think the appropriate market capitalization rate is 16% per
year.
a. What is your estimate of the intrinsic value
of a share of the stock?
b. b. If the market price of a share is equal
to this intrinsic...
A company just paid a dividend of $1.95 per share, and that dividend is expected to...
A company just paid a dividend of $1.95 per share, and that
dividend is expected to grow at a constant rate of 4.50% per year
in the future. The company's beta is 1.65, the market risk premium
is 8.5%, and the risk-free rate is 6.50%. What is the company's
current stock price?
The Jameson Company just paid a dividend of $0.75 per share, and that dividend is expected...
The Jameson Company just paid a dividend of $0.75 per share, and
that dividend is expected to grow at a constant rate of 5.00% per
year in the future. The company's beta is 1.75, the market risk
premium is 5.00%, and the risk-free rate is 4.00%. What is
Jameson's current stock price, P0?
Stock ABC recently paid a dividend of $1.15 per share. The dividend growth rate is expected to be 4.20%
Stock ABC recently paid a dividend of $1.15 per share. The dividend growth rate is expected to be 4.20% indefinitely. Stockholders require a rate of return of 11% on this stock. If the stock trades at a price of $16.7, what will your holding period return be if you buy it now and sell it after 2 years for the intrinsic value according to the constant growth dividend discount model?
Problem 1. The Duo Growth Company just paid a dividend of $1 per share. The dividend...
Problem 1. The Duo Growth Company just paid a
dividend of $1 per share. The dividend is expected to grow at a
rate of 25% for the next 3 years and then level off to 5% per year
forever. You think the appropriate market capitalization rate is
20% per year. (3 pts.)
What is your estimate of the intrinsic value of a share of
stock?
If the market price of a share is equal to this intrinsic value,
what is...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
ADVERTISEMENT