Question

In: Finance

A company is expecting a period of intense growth and has decided to retain more of...

A company is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth. As a result, the company is going to reduce the annual dividend by 13.25% a year for the next three years. After those three years, the company will maintain a constant dividend of $0.75 a share. Recently, the company paid $1.55 as the annual dividend per share. What is the market value of this stock if the required rate of return is 10.25%?
options: $7.76
$7.97
$8.18
$8.39
$8.60

Solutions

Expert Solution

Ans is $8.39

Please upvote if the ans is helpful. In case of doubt,do comment.Thanks.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

A company is expecting a period of intense growth and has decided to retain more of...
A company is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth. As a result, the company is going to reduce the annual dividend by 13.00% a year for the next three years. After those three years, the company will maintain a constant dividend of $0.70 a share. Recently, the company paid $1.50 as the annual dividend per share. What is the market value of this stock if the...
1)ABC company is expecting a period of intense growth and has decided to increase its annual...
1)ABC company is expecting a period of intense growth and has decided to increase its annual dividend by 10 percent a year for the next two years. After that, it will maintain a constant dividend growth of 2%. The company just paid $1.80 per share. What is the value of this stock if the required rate of return is 13 percent? 2) XYZ company has $140,000 budget constrain on new project (it can invest only $140,000). The company is considering...
Scenario: Kim Weathers, CEO of Southwest Idaho Bank and Trust, has decided to retain the bank’s...
Scenario: Kim Weathers, CEO of Southwest Idaho Bank and Trust, has decided to retain the bank’s corporate jet at a time most of the bank’s competitors have sold theirs. The bank has built a reputation for being an expert in taking care of the needs of a diverse, specialized segment of customers such as cattle ranchers in Montana and western Texas as well as almond growers in California. Ms. Weathers has determined that the bank’s executives, including her, need to...
You are expecting either a recession or steady growth next year. Recession has a 11% probability...
You are expecting either a recession or steady growth next year. Recession has a 11% probability of happening. In steady growth, stock ABC returns 13.75% and stock XYZ returns 10.75%. In a recession, stock ABC returns -6.90% and stock XYZ returns -4.70%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 69% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 25% probability...
You are expecting either a recession or steady growth next year. Recession has a 25% probability of happening. In steady growth, stock ABC returns 12.00% and stock XYZ returns 9.00%. In a recession, stock ABC returns -6.20% and stock XYZ returns -4.00%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 55% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 49% probability...
You are expecting either a recession or steady growth next year. Recession has a 49% probability of happening. In steady growth, stock ABC returns 9.00% and stock XYZ returns 6.00%. In a recession, stock ABC returns -5.00% and stock XYZ returns -2.80%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 31% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 31% probability...
You are expecting either a recession or steady growth next year. Recession has a 31% probability of happening. In steady growth, stock ABC returns 11.25% and stock XYZ returns 8.25%. In a recession, stock ABC returns -5.90% and stock XYZ returns -3.70%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 49% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 25% probability...
You are expecting either a recession or steady growth next year. Recession has a 25% probability of happening. In steady growth, stock ABC returns 12.00% and stock XYZ returns 9.00%. In a recession, stock ABC returns -6.20% and stock XYZ returns -4.00%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 55% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 19% probability...
You are expecting either a recession or steady growth next year. Recession has a 19% probability of happening. In steady growth, stock ABC returns 12.75% and stock XYZ returns 9.75%. In a recession, stock ABC returns -6.50% and stock XYZ returns -4.30%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 61% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
kevin is expecting either a recession or steady growth next year. Recession has a 15% probability...
kevin is expecting either a recession or steady growth next year. Recession has a 15% probability of happening. In steady growth, stock ABC returns 13.25% and stock XYZ returns 10.25%. In a recession, stock ABC returns -6.70% and stock XYZ returns -4.50%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 65% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT