Question
In: Finance
A company currently pays a dividend of $2.25 per share (D0 = $2.25).
Nonconstant Growth Valuation
A company currently pays a dividend of $2.25 per share (D0 = $2.25). It is estimated that the company's dividend will grow at a rate of 18% per year for the next 2 years, then at a constant rate of 5% thereafter. The company's stock has a beta of 1.3, the risk-free rate is 3%, and the market risk premium is 3%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
A company currently pays a dividend of $2.25 per share (D0 = $2.25). It is estimated...
A company currently pays a dividend of $2.25 per share (D0 =
$2.25). It is estimated that the company's dividend will grow at a
rate of 17% per year for the next 2 years, and then at a constant
rate of 6% thereafter. The company's stock has a beta of 1.2, the
risk-free rate is 6%, and the market risk premium is 4%. What is
your estimate of the stock's current price? Do not round
intermediate calculations. Round your answer...
A company currently pays a dividend of $2.25 per share (D0 = $2.25). It is estimated...
A company currently pays a dividend of $2.25 per share
(D0 = $2.25). It is estimated that the company's
dividend will grow at a rate of 15% per year for the next 2 years,
and then at a constant rate of 5% thereafter. The company's stock
has a beta of 1.8, the risk-free rate is 5%, and the market risk
premium is 5%. What is your estimate of the stock's current price?
Do not round intermediate calculations. Round your answer...
A company currently pays a dividend of $1 per share (D0 = $1). It is estimated...
A company currently pays a dividend of $1 per share
(D0 = $1). It is estimated that the company's dividend
will grow at a rate of 17% per year for the next 2 years, and then
at a constant rate of 5% thereafter. The company's stock has a beta
of 1.6, the risk-free rate is 7%, and the market risk premium is
3%. What is your estimate of the stock's current price? Do not
round intermediate calculations. Round your answer...
A company currently pays a dividend of $1 per share (D0 = $1). It is estimated...
A company currently pays a dividend of $1 per share (D0 = $1).
It is estimated that the company's dividend will grow at a rate of
16% per year for the next 2 years, and then at a constant rate of
7% thereafter. The company's stock has a beta of 1.2, the risk-free
rate is 8%, and the market risk premium is 4.5%. What is your
estimate of the stock's current price? Do not round intermediate
calculations. Round your answer...
A company currently pays a dividend of $3.8 per share (D0 = $3.8). It is estimated...
A company currently pays a dividend of $3.8 per share (D0 =
$3.8). It is estimated that the company's dividend will grow at a
rate of 21% per year for the next 2 years, and then at a constant
rate of 6% thereafter. The company's stock has a beta of 1.4, the
risk-free rate is 8%, and the market risk premium is 4.5%. What is
your estimate of the stock's current price? Do not round
intermediate calculations. Round your answer...
A company currently pays a dividend of $2.8 per share (D0 = $2.8). It is estimated...
A company currently pays a dividend of $2.8 per share
(D0 = $2.8). It is estimated that the company's dividend
will grow at a rate of 22% per year for the next 2 years, and then
at a constant rate of 5% thereafter. The company's stock has a beta
of 1.6, the risk-free rate is 6.5%, and the market risk premium is
2%. What is your estimate of the stock's current price? Do not
round intermediate calculations. Round your answer...
A company currently pays a dividend of $1.6 per share (D0 = $1.6). It is estimated...
A company currently pays a dividend of $1.6 per share
(D0 = $1.6). It is estimated that the company's dividend
will grow at a rate of 24% per year for the next 2 years, and then
at a constant rate of 8% thereafter. The company's stock has a beta
of 1.7, the risk-free rate is 7%, and the market risk premium is
2.5%. What is your estimate of the stock's current price? Do not
round intermediate calculations. Round your answer...
A company currently pays a dividend of $2.4 per share (D0 = $2.4). It is estimated...
A company currently pays a dividend of $2.4 per share
(D0 = $2.4). It is estimated that the company's dividend
will grow at a rate of 16% per year for the next 2 years, and then
at a constant rate of 7% thereafter. The company's stock has a beta
of 1.5, the risk-free rate is 7.5%, and the market risk premium is
3.5%. What is your estimate of the stock's current price? Do not
round intermediate calculations. Round your answer...
A company currently pays a dividend of $4 per share (D0 = $4). It is estimated...
A company currently pays a dividend of $4 per share
(D0 = $4). It is estimated that the company's dividend
will grow at a rate of 15% per year for the next 2 years, and then
at a constant rate of 5% thereafter. The company's stock has a beta
of 1.1, the risk-free rate is 9.5%, and the market risk premium is
5.5%. What is your estimate of the stock's current price? Do not
round intermediate calculations. Round your answer...
A company currently pays a dividend of $3 per share (D0 = $3). It is estimated...
A company currently pays a dividend of $3 per share (D0 = $3).
It is estimated that the company's dividend will grow at a rate of
20% per year for the next 2 years, and then at a constant rate of
6% thereafter. The company's stock has a beta of 1.5, the risk-free
rate is 9.5%, and the market risk premium is 6.5%. What is your
estimate of the stock's current price? Do not round intermediate
calculations. Round your answer...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Suppose Rialto is the only movie cinema in a small college town, so it is essentially...
- With VMI, members of the supply chain share planning, demand, forecasting, and inventory information.
- Large lots are desirable in supply chain coordination despite increasing holding costs.
- ***Convert the C++ to Python*** #include <iostream> using std::cout; using std::cin; using std::endl; int charClass; char...
- Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a...
- The following costs were incurred for the single product produced during the first year of operations...
- Non-constant growth model: Do=$2.00 required return on equity= 5% g= 9% n=1,2 g=7% n=3,4 g=3% n=5...
ADVERTISEMENT