Question

In: Finance

A fast-growing firm recently paid a dividend of $0.95 per share. The dividend is expected to...

A fast-growing firm recently paid a dividend of $0.95 per share. The dividend is expected to increase at a 15 percent rate for the next three years. Afterwards, a more stable 10 percent growth rate can be assumed.

If a 11 percent discount rate is appropriate for this stock, what is its value? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Complete the following analysis. Do not hard code values in your calculations. Assume that the period of nonconstant growth will last no more than 5 years

Time period Dividend

1 ?

2 ?

3 ?

4 ?

5    ?

6 ?

Value at time 5 ?

Value today    ?

PLEASE, ALL ANSWERS MUST BE ENTERED AS A FORMULA (EXCEL)

Solutions

Expert Solution



Related Solutions

Variable Growth A fast growing firm recently paid a dividend of $0.50 per share. The dividend...
Variable Growth A fast growing firm recently paid a dividend of $0.50 per share. The dividend is expected to increase at a 20 percent rate for the next 3 years. Afterwards, a more stable 10 percent growth rate can be assumed. If a 12 percent discount rate is appropriate for this stock, what is its value?' Equation: Constant growth model = P0 = D0(1+g)                                                  ________                                                     I - g
(2) Firm A has recently paid dividend of $ 14 per share. It is expected that...
(2) Firm A has recently paid dividend of $ 14 per share. It is expected that firm A will grow by 15% for next six years and 5% thereafter. It is also known that firm A’s beta is 1.5, risk free rate is 1%, and market risk premium is 6%. Estimate the stock value of firm A.
A company recently paid a $3 per share dividend, which is expected to grow at a...
A company recently paid a $3 per share dividend, which is expected to grow at a constant rate forever. The company’s stock, has a beta coefficient equal to 1.1, is selling for $40.50 per share. Currently, the risk-free rate of return is 3 percent and the return on an average stock is 10 percent. If the stock is selling at its equilibrium price, what is its growth rate?
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?
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?
Tester Ltd is a fast-growing, dividend-paying corporation. It has just paid a dividend of $1.00 per...
Tester Ltd is a fast-growing, dividend-paying corporation. It has just paid a dividend of $1.00 per share. An investment analyst expects its dividend to grow rapidly at 30% for the next five years, and the n at a 5% growth rate for the future years. a. If the required rate of return is 10%, using a Two-Stage Dividend Growth Model, what is the value of this stock? b. If the stock’s reported earnings per share (EPS) is $2.00, and the...
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?
Last year, Wilderness Adventures paid an annual dividend of $3.70 per share. The firm recently announced...
Last year, Wilderness Adventures paid an annual dividend of $3.70 per share. The firm recently announced that it will increase its dividend by a constant 12.5 percent annually. What is one share of this stock worth today at a required rate of 17.8 percent? $78.05 $79.63 $78.54 $79.75 Excelor stock is expected to pay $2.80 per share as its next annual dividend. The firm has a policy of increasing the dividend by 10.0 percent annually. The stock has a market...
A company recently paid a dividend of $1.20 per share. It is estimated that the company's...
A company recently paid a dividend of $1.20 per share. It is estimated that the company's dividend will grow at the rate of 15% per year for the next 5 years, then at a constant rate of 7% a year thereafter. The required return on this company is 8.80%. What is the estimated stock price today?
ABZ Corp. just paid a dividend of $1.00 per share. The dividend is expected to grow...
ABZ Corp. just paid a dividend of $1.00 per share. The dividend is expected to grow 6% per year in perpetuity.  The stock's beta is 0.85.  The risk-free rate is 3%, and the market risk premium is 7%. The current stock price is $37 per share.  Assume that one year from now the stock will be correctly valued. What are the dividend yield, capital gain yield and expected return for the coming year? Draw the Security Market Line and plot the stock on...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT