The In-Tech Co. just paid a dividend of $1 per share. Analysts expect its dividend to...

The In-Tech Co. just paid a dividend of $1 per share. Analysts expect its dividend to grow at 25% per year for the next three years and then at a constant growth rate per year thereafter. The estimate of the constant growth rate of dividend is based on the long term return of equity 25% and payout ratio 80%. If the required rate of return on the stock is 18%, what is the current value of the stock? Clearly show the inputs and equations used to drive your answer to get full credits.

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jeff jeffy answered 2 years ago

The In-Tech Co. just paid a dividend of $1.5 per share. Analysts expect its dividend to...

The In-Tech Co. just paid a dividend of $1.5 per share. Analysts expect its dividend to grow at 20 percent per year for the next three years and then 3 percent per year thereafter. If the required rate of return on the stock is 5.5 percent. What is the current value of the stock ? 96.80 94.15 none of the above 98.30 92.16

Digital Plc just paid a dividend of $3 per share. Analysts expect its dividend to grow...

Digital Plc just paid a dividend of $3 per share. Analysts expect its dividend to grow at 12% per year for the next three years and then 6% per year, indefinitely thereafter. If the required rate of return on the stock is 10%, what is the current value of the stock? a) 93 b) 87 c) 77 d) 69 e) 98

The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect...

The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect that the growth rate for the dividend will be 40% in year 1, 30% in year 2, 20% in year 3, 15% in year 4, and 10% in year five. After the fifth year, the dividend will grow at a constant rate of 6%. If the required return for Birdstrom is 12%, calculate the current stock price and the expected dividend yield and capital...

Mack Industries just paid a dividend of $1.00 per share. Analysts expect the company's dividend to...

Mack Industries just paid a dividend of $1.00 per share. Analysts expect the company's dividend to grow 20% this year and 15% next year. After 2 years the dividend is expected to grow at a constant rate of 5%. The required rate of return on the company's stock is 12%. What is the current price of the company's stock? Also, the stock is currently priced in the market as of today at $20.00 per share. As an investor would you...

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,...

1. RRR Co. just paid a dividend of $1.15 per share. The dividend is expected to...

1. RRR Co. just paid a dividend of $1.15 per share. The dividend is expected to grow by 40% next year, 20% in both Years 2 & 3, 10% in Year 4, and then grow at a constant rate of 4% thereafter. The required rate of return is 8.5%. Compute the selling price of the stock.

Storico Co. just paid a dividend of $1.55 per share. The company will increase its dividend...

Storico Co. just paid a dividend of $1.55 per share. The company will increase its dividend by 24 percent next year and then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $27.28, what required return must investors be demanding on the company's stock? (Hint: Set up the valuation formula with...

Yoland Co. just paid a dividend of $2.00 per share. The company will increase its dividend...

Yoland Co. just paid a dividend of $2.00 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $53.04, what required return must investors be demanding on the company's stock? (Hint: Set up the valuation formula with...

Storico Co. just paid a dividend of $1.75 per share. The company will increase its dividend...

Storico Co. just paid a dividend of $1.75 per share. The company will increase its dividend by 24 percent next year and then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $44.96, what required return must investors be demanding on the company's stock? (Hint: Set up the valuation formula with...

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