Ashley is considering the purchase of a stock that has just paid a dividend of $0.72,...

Ashley is considering the purchase of a stock that has just paid a dividend of $0.72, today. The dividend is expected to grow at a rate of 2.8 percent per year and the market requires a return of 8% on assets of similar risks. What is the price that Ashley should pay for this stock?

$14.23

$17.13

$10.28

$17.57

Expert Solution

Div1 = $0.72 * (1 + 2.8%) = $0.74016

jeff jeffy answered 2 years ago

You are analyzing a company's stock for a possible purchase. They just paid a dividend of...

You are analyzing a company's stock for a possible purchase. They just paid a dividend of $1.75, yesterday. You expect the dividend to grow at the rate of 7% per year for the next three years; if you buy the stock, you plan to hold it for 3 years and then sell it. The stock has a required return of 12%. The stock will sell in three years at a price of $29.16 1.What dividends do you expect for...

a. A stock just paid a dividend of $1.04. The dividend is expected to grow at...

a. A stock just paid a dividend of $1.04. The dividend is expected to grow at 26.98% for three years and then grow at 4.97% thereafter. The required return on the stock is 11.63%. What is the value of the stock? b. A stock just paid a dividend of $1.17. The dividend is expected to grow at 22.53% for five years and then grow at 4.80% thereafter. The required return on the stock is 14.27%. What is the value of...

A stock just paid a dividend of $2.40. The dividend is expected to grow at a...

A stock just paid a dividend of $2.40. The dividend is expected to grow at a rate of 5% forever. If the stock is currently selling for $25.00, what return do investors require to hold this stock? 18%, 17%, 16%, 15% A project is projected to cost $2,000,000 to undertake. It will generate positive cash inflows as follows: Year 1 - $400,000; Year 2 – 500,000; Year 3 - $650,000; Year 4 – 700,000; Year 5 – 800,000. What is...

A stock just paid a dividend of $2. The stock is expected to increase its dividend...

A stock just paid a dividend of $2. The stock is expected to increase its dividend payment by 50% per year for the next 3 years. After that, dividends will grow at a rate of 5% forever. If the required rate of return is 7%, what is the price of the stock today?

You are analyzing Jillian’s Jewelry (JJ) stock for a possible purchase. JJ just paid a dividend...

You are analyzing Jillian’s Jewelry (JJ) stock for a possible purchase. JJ just paid a dividend of $1.25 yesterday. You expect the dividend to grow at the rate of 6% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years and then sell it. What dividends do you expect for JJ stock over the next 3 years? In other words, calculate D1, D2 and D3. Note that D0 = $1.25....

jk stock currently sells for $50 a share. the stock has just paid a dividend of...

jk stock currently sells for $50 a share. the stock has just paid a dividend of $2 a share. the dividend is expected to grow at a constant rate of 6% per year. what is the stock price that would be expected in one year from now? what is the required rate of return on jks stock?.

Monster Inc just paid a dividend of $1.33. Its stock has a dividend growth rate of...

Monster Inc just paid a dividend of $1.33. Its stock has a dividend growth rate of 7.6% and a required return of 12.21%. What is the current stock price if we anticipate dividends stopping in 10 years?

A stock just paid a dividend of $2.47. The dividend is expectedto grow at 23.57%...

A stock just paid a dividend of $2.47. The dividend is expected to grow at 23.57% for three years and then grow at 4.01% thereafter. The required return on the stock is 13.91%. What is the value of the stock? Round to 2 decimal places. Also, a stock just paid a dividend of $1.49. The dividend is expected to grow at 25.13% for five years and then grow at 3.72% thereafter. The required return on the stock is 11.24%. What...

A stock just paid a dividend of $2.27. The dividend is expected to grow at 22.36%...

A stock just paid a dividend of $2.27. The dividend is expected to grow at 22.36% for five years and then grow at 3.96% thereafter. The required return on the stock is 10.02%. What is the value of the stock?

A stock just paid a dividend of $1.28. The dividend is expected to grow at 27.28%...

A stock just paid a dividend of $1.28. The dividend is expected to grow at 27.28% for three years and then grow at 3.92% thereafter. The required return on the stock is 11.35%. What is the value of the stock? A stock just paid a dividend of $1.95. The dividend is expected to grow at 25.66% for five years and then grow at 3.74% thereafter. The required return on the stock is 11.13%. What is the value of the stock?...

Question