Tyler Inc.'s most recent annual dividend was $3.50 a share. The firm has been growing at...

Tyler Inc.'s most recent annual dividend was $3.50 a share. The firm has been growing at a consistent 4% rate for several years, but analysts generally believe better times are ahead and future growth will be in the neighborhood of 5%. The stock is currently selling for $78. Stocks similar to Tyler earn returns ranging from 8% to 10%.

Calculate value for a share of Tyler at interest rate of 8%. Round the answer to two decimal places.
$

Calculate value for a share of Tyler at interest rate of 9%. Round the answer to two decimal places.
$

Calculate value for a share of Tyler at interest rate of 10%. Round the answer to two decimal places.
$
Do you think Tyler is a good investment for the long run - that is, for someone planning to hold onto it for 10 or more years?
Do you think it's a good investment for the short term? That is, should you buy it with the expectation of selling in a relatively short period, say a year or less?

Repeat the calculations in part (a) assuming that instead of rising, Tyler's growth rate remains at 4% or declines to 3%. Round your answers to two decimal places.

Growth rate of 4%, interest rate of 8%
$

Growth rate of 4%, interest rate of 9%
$

Growth rate of 4%, interest rate of 10%
$

Growth rate of 3%, interest rate of 8%
$

Growth rate of 3%, interest rate of 9%
$

Growth rate of 3%, interest rate of 10%
$
Comment on the range of prices that you've calculated in parts (a) and (d).
I. According to the range of prices it's worth buying the stock for $78.
II. Depending on the range of prices it's not worth buying the stock for $78.
III.It is impossible to say whether it's a good buy or not.

Expert Solution

jeff jeffy answered 1 year ago

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