Question
In: Finance
Marmara MIS Company has an expected growth rate at 0%. Each share of stock just received an annual 5 TL dividend per share. If the required return on the stock is 15%, what is the value of the common stock?
Marmara MIS Company has an expected growth rate at 0%. Each share of stock just received an annual 5 TL dividend per share. If the required return on the stock is 15%, what is the value of the common stock?
Solutions
Expert Solution
As per the Gordon Growth Model:
where, Po = Value of stock today
Do = Current annual dividend per share =
r = Required annual rate of return
g = Annual dividend growth rate
In the given question we are given the following,
Growth rate (g) = 0%
Current annual dividend per share (Do) = 5 TL
Required rate of return (r) = 15%
Value of stock today (Po) = ?
So,
P0 = 33.33 TL
Nabeel answered 1 year agoRelated Solutions
What rate of return should an investor expect on a share of stock with a 5 TL expected dividend and 8% growth rate that sells today for 60 TL?
What rate of return should an investor expect on a share of stock with a 5 TL expected dividend and 8% growth rate that sells today for 60 TL?
Bozo Inc. just paid an annual dividend of $1.50 per share, and the required return for this stock is 15%.
Bozo Inc. just paid an annual dividend of $1.50 per share, and the required return for this stock is 15%. A. Calculate Bozo's stock value with the following assumptions A. No dividend growth B. A constant growth of 5% C. A constant growth of 10% D. A constant growth of 5% and a requiredi return of 10%
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?
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?
Spencer Co.'s common stock is expected to have a dividend of $5 per share for each...
Spencer Co.'s common stock is expected to have a dividend of $5
per share for each of the next 11 years, and it is estimated that
the market value per share will be $108 at the end of 11 years. If
an investor requires a return on investment of 10%, what is the
maximum price the investor would be willing to pay for a share of
Spencer Co. common stock today? (Do not round intermediate
calculations. Round your answer to...
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...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for...
- When the electricity goes out on your campus, a backup source powers the servers that handle...
- I am having trouble with my assignment and getting compile errors on the following code. The...
- Can someone show me how to write a Haskell function using snd on a list of...
- Please do in java Program 3: Give a baby $5,000! Did you know that, over the...
- This is all one question, thank you so much in advance! You must evaluate the purchase...
- 10. Consider a market in which there is a monopoly manufacturer and a mo nopoly retailer....
ADVERTISEMENT