Question

In: Finance

A company just paid a $1.60 per share annual dividend. The company is planning on paying...

A company just paid a $1.60 per share annual dividend. The company is planning on paying $2.90, $3.05, $3.15, and $3.30 a share over the next 4 years, respectively. After that, the dividend will be a constant $3.35 per share per year. What is this stock worth to you per share if you require a 11.25% rate of return?
Question 7 options: $26.06
$26.78
$27.51
$28.23
$28.95

Solutions

Expert Solution

Year Particulars Cash flow × discount rate Present value
1 Dividend               2.90             0.89888 $            2.61
2 Dividend               3.05             0.80798 $            2.46
3 Dividend               3.15             0.72627 $            2.29
4 Dividend               3.30             0.65283 $            2.15
4 Share price             29.78             0.65283 $          19.44
Stock price today $          28.95

Answer is 28.95

please rate.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

A company just paid a $1.60 per share annual dividend. The company is planning on paying...
A company just paid a $1.60 per share annual dividend. The company is planning on paying $2.20, $2.35, $2.45, and $2.60 a share over the next 4 years, respectively. After that, the dividend will be a constant $2.65 per share per year. What is this stock worth to you per share if you require a 9.50% rate of return? $26.37 $27.05 $27.72 $28.40 $29.07
ABC Company last paid a $3.00 per share annual dividend. The company is planning on paying...
ABC Company last paid a $3.00 per share annual dividend. The company is planning on paying $3.5.00, $4.5.00, $5.5.00, and $6.5.00 a share over the next four years, respectively. After that the dividend will be a constant $4.50 per share per year. Answer the following questions: a. What is the price of the stock today if investors require a 12 percent rate of return? b. What is the price of the stock today if the sustained dividend of the company...
The Leprechaun Corp. last paid a $1.50 per share annual dividend. The company is planning on...
The Leprechaun Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $3.00, $5.00, $7.50, and $10.00 a share over the next four years, respectively. After that the dividend will be a constant $2.50 per share per year. What is the market price of this stock if the market rate of return is 15%? Group of answer choices $17.04 $22.39 $26.57 $29.08 $33.71
BBB company just paid their annual dividend of $1.20 per share. They are projecting dividends of...
BBB company just paid their annual dividend of $1.20 per share. They are projecting dividends of $1.50 and $1.80 over the next two years, respectively. After that, the dividend will increase by 3% every year. What is the amount you are willing to pay for one share of this stock if your required return is 10 percent?
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?
SCI just paid a dividend (D0) of $12.16 per share, and its annual dividend is expected...
SCI just paid a dividend (D0) of $12.16 per share, and its annual dividend is expected to grow at a constant rate (g) of 4.50% per year. If the required return (r) on SCI's stock is 11.25%, then the intrinsic value of SCI's shares is[ Select ] ["$195.25", "$181.25", "$188.25"]         ?   If SCI's stock is in equilibrium, the current dividend yield on the stock will be [ Select ] ["8.75%", "7.75%", "6.75%"] per share? If SCI's stock is...
A company just paid a dividend of $1.53 per share and you expect the dividend to...
A company just paid a dividend of $1.53 per share and you expect the dividend to grow at a constant rate of 5.6% per year indefinitely into the future. If the required rate of return is 13.4% per year, what would be a fair price for this stock today? (Answer to the nearest penny per share.)
A company just paid a dividend of $0.79 per share and you expect the dividend to...
A company just paid a dividend of $0.79 per share and you expect the dividend to grow at a constant rate of 5.2% per year indefinitely into the future. If the required rate of return is 12.4% per year, what would be a fair price for this stock today? (Answer to the nearest penny per share.) A 6.4% coupon bearing bond pays interest semi-annually and has a maturity of 6 years. If the current price of the bond is $1,023.87,...
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?
DB company just paid a dividend of $ D0 per share. It is estimated that the...
DB company just paid a dividend of $ D0 per share. It is estimated that the company's dividend will grow at a rate of 10 percent per year for the next 2 years, then the dividend is expected to grow at constant rate of 6 percent thereafter. You are also given that DB stock’s has beta of 1.2, and the expected market rate of return is 11% and the risk-free rate is 6%. Based on this, the current price of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT