Wonder Trees Inc. expects to pay the next dividend payment of $2.8 per share (D1). The...

Wonder Trees Inc. expects to pay the next dividend payment of $2.8 per share (D₁). The company is expected to maintain a 6 percent growth rate forever. If the company stock currently sells for $39 per share, the required return should be ______ percent. Express in percentage without the % sign, and round it to two decimal places, e.g., 13.45.

Solutions

Expert Solution

r - 0.06 = 2.8/39

r - 0.06 = 0.0718

r = 13.18%

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Please answer the following questions! Wonder Trees Inc. expects to pay the next dividend payment of...

Please answer the following questions! Wonder Trees Inc. expects to pay the next dividend payment of $4.5 per share (D1). The company is expected to maintain a 6 percent growth rate forever. If the company stock currently sells for $41 per share, the required return should be ______ percent. Express in percentage without the % sign, and round it to two decimal places, e.g., 13.45. Rascal, Inc., has an issue of preferred stock outstanding that pays a $8.9 dividend every...

Glaham Restaurants expects to pay a common stock dividend of $1.50 per share next year (d1)....

Glaham Restaurants expects to pay a common stock dividend of $1.50 per share next year (d1). Dividends are expected to grow at a 4% rate for the foreseeable future. Glaham’s common stock is selling for $18.50 per share and issuance costs are $3.50 per share. What is Glaham’s cost of external equity? 20.59% 12.11% 14.00% 10.00%

A stock expects to pay a dividend of $3.72 per share next year. The dividend is...

A stock expects to pay a dividend of $3.72 per share next year. The dividend is expected to grow at 25 percent per year for three years followed by a constant dividend growth rate of 4 percent per year in perpetuity. What is the expected stock price per share 5 years from today, if the required return is 12 percent?

The next dividend payment by ZYX inc will be $1.99 per share. The dividend is anticipated...

The next dividend payment by ZYX inc will be $1.99 per share. The dividend is anticipated to maintain a growth rate of 4.5%. What is the dividend yield? What is the expected capital gains yield? share $1.99 rate 4.50% current stock $31

- A stock expects to pay a year-end dividend of $2.50 a share (i.e., D1 =...

- A stock expects to pay a year-end dividend of $2.50 a share (i.e., D1 = $2.50); assume that last year’s dividend has already been paid). The dividend is expected to decline 5 percent a year, forever (i.e., g = -5%). The company’s expected and required rate of return is 12 percent. What is the current market price per share of this stock? - The expected rate of return on the common stock of Northwest Corporation is 10 percent. The...

The next dividend payment by Savitz, Inc., will be $1.76 per share. The dividends are anticipated...

The next dividend payment by Savitz, Inc., will be $1.76 per share. The dividends are anticipated to maintain a growth rate of 7 percent forever. If the stock currently sells for $34 per share, what is the required return?

The next dividend payment by Hoffman, Inc., will be $2.65 per share. The dividends are anticipated...

The next dividend payment by Hoffman, Inc., will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. Assume the stock currently sells for $43.15 per share. What is the dividend yield? What is the expected capital gains yield? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

1. The next dividend payment by SAF, Inc., will be $4.20 per share. The dividends are...

1. The next dividend payment by SAF, Inc., will be $4.20 per share. The dividends are anticipated to maintain a 5 percent growth rate, forever. If SAF stock currently sells for $62.00 per share, what is the required return? 1-1. For the company in the previous problem, what is the dividend yield? What is the expected capital gains yield?

The next dividend payment by Wyatt, Inc., will be K2.30 per share. The dividends are anticipated...

The next dividend payment by Wyatt, Inc., will be K2.30 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. If the stock currently sells for K39.85 per share, what is the required return? For the company in the previous problem, what is the dividend yield? What is the expected capital gains yield?

A mature U.S. telecommunications company expects to pay a dividend per share of $6 next year...

A mature U.S. telecommunications company expects to pay a dividend per share of $6 next year (paid annually at the end of the year) and expects the dividend to grow at a constant rate in the future. The firm’s equity beta equals 0.65. The risk free rate is 3%, and the expected return on the stock market index is 8%. The firm reinvests 20% of its earnings at an ROE of 12.5%. The current book value per share is $60....

Subjects