Company Z's earnings and dividends per share are expected to grow indefinitely by 2% a year.

Company Z's earnings and dividends per share are expected to grow indefinitely by 2% a year. If next year's dividend is $7 and the market capitalization rate is 11%, what is the current stock price?

Expert Solution

value of the share can be calculated by using dividend discount model

p = D1/(k-g)

where D1 is dividend for year 1 = 7

k is market rate = 11%

g is growth = 2%

jeff jeffy answered 2 years ago

The FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year.

The FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year. a. If this year’s year-end dividend is $12.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? b. If the expected earnings per share are $18.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) c. How much is the market paying per share for growth opportunities...

FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year. a. If...

FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year. a. If this year’s year-end dividend is $12.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? b. If the expected earnings per share are $18.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) c. How much is the market paying per share for...

The FI Corporation’s dividends per share are expected to grow indefinitely by 6% per year. a....

The FI Corporation’s dividends per share are expected to grow indefinitely by 6% per year. a. If this year’s year-end dividend is $8.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? b. If the expected earnings per share are $16.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) c. How much is the market paying per share...

Company Z’s earnings and dividends per share are expected to grow by 3% per year for...

Company Z’s earnings and dividends per share are expected to grow by 3% per year for the next 4 years, then stop growing. In year 5 and after, it will pay out all earnings as dividends. Assume next year’s dividend is $3, the market capitalization rate is 10%, and next year’s EPS = $10. What is Company Z’s stock price? Please explain answer and solution clearly

Company Z-prime’s earnings and dividends per share are expected to grow by 4% a year. Its...

Company Z-prime’s earnings and dividends per share are expected to grow by 4% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year’s dividend is $9, the market capitalization rate is 9% and next year’s EPS is $14. What is Z-prime’s stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) My guess was: $153.42 and this WAS NOT CORRECT

Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. Its...

Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year’s dividend is $9, the market capitalization rate is 11% and next year’s EPS is $16. What is Z-prime’s stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Part 1 Company Z-prime’s earnings and dividends per share are expected to grow by 2% a...

Part 1 Company Z-prime’s earnings and dividends per share are expected to grow by 2% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year’s dividend is $10, the market capitalization rate is 12% and next year’s EPS is $17. What is Z-prime’s stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Part 2 Company's Z's earnings and dividends per...

Company ABC's earnings per share this year are $5. ABC's earnings are expected to grow at...

Company ABC's earnings per share this year are $5. ABC's earnings are expected to grow at rate g every year. The return that investors expect on ABC is 10%. ABC's current (ex-dividend) stock price is $80. ABC's payout ratio is 0.4. (a) Determine rate g. (b) Determine the present value of ABC's growth opportunities.

Dividends are expected to grow at 1.7% rate indefinitely, and the last dividend was $6. If...

Dividends are expected to grow at 1.7% rate indefinitely, and the last dividend was $6. If the relevant risk return is 5%, what would you be willing to pay for the stock. A) $120.000 B) S122.000 C) $181.818 D) $184.909 E) $ 5.811

Hudaverdi Ltd pay current dividends of $0.61 per share with these dividends expected to grow at...

Hudaverdi Ltd pay current dividends of $0.61 per share with these dividends expected to grow at a rate of 2% per year in perpetuity. Hudaverdi Ltd shares are currently trading at $6.91 per share. What is the cost of equity finance for Hudaverdi Ltd? Give your answer as a percentage per annum to 1 decimal place. Cost of equity = % pa Gertrude's Great Gloves issue bonds with a face value of $1,000, paying interest at j2 = 6.75%, redeemable in...

Question