Question

In: Accounting

EDM Inc. is a firm that is experiencing rapid growth. Lately, the firm paid a dividend...

  1. EDM Inc. is a firm that is experiencing rapid growth. Lately, the firm paid a dividend of P5.90. You believe that dividends will grow at a rate of 19.0% per year for three years, and then at a rate of 7.0% per year thereafter. If you expect an annual rate of return of 12% on this investment and you plan to hold the stock indefinitely, that is the current price of the stock?
  2. The earnings, dividends, and stock price of KS Company are expected to grow at 7% per year after this year. KS Company’s common stock sells for P23 per share, its last dividend as P2.00 and the company pay P2.14 at the end of the current year. KS should pay P2.50 flotation cost. Using dividend growth model (Gordon Method), what is the expected cost of retained earnings for KS Company? What is the expected cost of issuing new common stock for KS Company?
  3. If AAAM Company’s beta is 75, the risk-free rate is 8%, and the average return on the market is 12%, what will be the firm’s cost of equity using CAPM approach?
  4. NT Company’s cost of capital with a capital structure of 2 debt-to-equity ratio, 8% cost of debt, 15% cost of equity, and 35% tax rate would be?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend...
Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.10. You believe that dividends will grow at a rate of 16.0% per year for two years, and then at a rate of 10.0% per year thereafter. You expect the stock will sell for $40.42 in two years. You expect an annual rate of return of 23.0% on this investment. If you plan to hold the stock indefinitely, what is the most you...
Biotechnica Inc. is experiencing rapid growth. Analysts forecast a growth of 10% for the next 3...
Biotechnica Inc. is experiencing rapid growth. Analysts forecast a growth of 10% for the next 3 years, followed by 3% growth in perpetuity thereafter. The company has just paid a dividend of $2.50, and the required return is 13%. Calculate the current value per share.
Willow Plastic Parts Inc. is experiencing rapid growth. Earnings and dividends are expected to grow at...
Willow Plastic Parts Inc. is experiencing rapid growth. Earnings and dividends are expected to grow at a rate of 18% during the next 2 years, 14% the following year, and then a constant rate of 6% during Year 4 and beyond.    Willow’s last dividend was $2.25. The risk-free rate of return is 1.00%. Willow has a market Beta of 1.3 and the Expected Return of the Market is 22.0%. Calculate the intrinsic value of the stock today. (Vo) If...
Bahamas Inc. is experiencing rapid growth. The company expects dividends to grow at 15 % per...
Bahamas Inc. is experiencing rapid growth. The company expects dividends to grow at 15 % per year for the next 4 years before leveling off at 6% into perpetuity. The required return on the company's stock is 11 percent. The dividend per share just paid was $1.25. 1) calculate the current market value of Bahamas Inc.'s stock. 2) calculate the expected market price of the share in one year. 3) calculate the expected dividend yield and capital gains yield expected...
Navel County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 15...
Navel County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 15 percent per year for the next 11 years before leveling off at 6 percent into perpetuity. The required return on the company’s stock is 14 percent. If the dividend per share just paid was $2.07, what is the stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
navel County Choppers, Inc., is experiencing rapid growth. The company expects dividends to grow at 15...
navel County Choppers, Inc., is experiencing rapid growth. The company expects dividends to grow at 15 percent per year for the next 11 years before leveling off at 6 percent into perpetuity. The required return on the company’s stock is 14 percent. If the dividend per share just paid was $2.07, what is the stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to...
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 20% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price? Select the correct answer. a. $45.45 b. $43.59 c. $44.83 d. $46.07 e. $44.21
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to...
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 22.5% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price? Select the correct answer. a. $48.24 b. $49.26 c. $48.75 d. $47.73 e. $47.22
The last dividend paid by Coppard Inc. was $1.40. The dividend growth rate is expected to...
The last dividend paid by Coppard Inc. was $1.40. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (r s) is 12%, what is its current stock price? Answers: a. $29.52 b. $32.49 c. $31.20 d. $33.50 e. $34.50
The last dividend paid by Coppard Inc. was $1.50. The dividend growth rate is expected to...
The last dividend paid by Coppard Inc. was $1.50. The dividend growth rate is expected to be constant at 35% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT