Renew It, Inc., is preparing to pay its first dividend. It is going to pay $0.45,...

Renew It, Inc., is preparing to pay its first dividend. It is going to pay $0.45, $0.60, and $1 a share over the next three years, respectively. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you per share if you demand a 10.8 percent rate of return on stocks of this type?

Solutions

Expert Solution

stock worth = 0.45/1.108 + $0.60/1.108^2 + 1/1.108^3 + (1.25/10.8%)/1.108^3= $10.14

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

New Gadgets, Inc., currently pays no dividend but is expected to pay its first annual dividend...

New Gadgets, Inc., currently pays no dividend but is expected to pay its first annual dividend of $5.50 per share exactly 7 years from today. After that, the dividends are expected to grow at 3.5 percent forever. If the required return is 12.5 percent, what is the price of the stock today? $35.17 $61.11 $26.79 $30.14 $49.71

What is the current stock price of Slack Inc. that will pay its first yearly dividend...

What is the current stock price of Slack Inc. that will pay its first yearly dividend of $3.00 in year 5, which will then grow for another 30 years at 8% per year, after which it will grow at 4% forever? The required rate of return on this stock is 13%.

Nu-Tek Inc. recently announced that it will pay its first annual dividend in one year in...

Nu-Tek Inc. recently announced that it will pay its first annual dividend in one year in the amount of $0.50 a share. The dividend will be increased by 50% annually for the following two years, after which time the increase will be limited to 2.5% annually. How much are you willing to pay for one share of this stock today if you require a 14% rate of return?

CEPS Group is going to pay an annual dividend of OMR 4.01 a share on its...

CEPS Group is going to pay an annual dividend of OMR 4.01 a share on its common stock next year. This year, the company paid a dividend of OMR 3.75 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth five years from now if the applicable discount rate is 9.25 percent?

1) ABC Inc. will pay its first annual dividend of $3 one year from today. In...

1) ABC Inc. will pay its first annual dividend of $3 one year from today. In the second year, the dividend will be $3.5. Dividends for year 3 and year 4 will be $4 and $5, respectively. After that, the dividends will decline at a constant rate of 3% per year till year 8. Thereafter, the dividends will grow at a constant rate of 5% per year forever. If the discount rate used is 10%, what is the stock price...

Gee-Gee's is going to pay an annual dividend of $2.05 a share on its common stock...

Gee-Gee's is going to pay an annual dividend of $2.05 a share on its common stock next year. This year, the company paid a dividend of $2 a share. The company adheres to a constant growth rate of dividend policy. What will one share of the stock be worth 5 years from now if investors require a 10.9 per cent rate of return? In order to qualify for full credit, you must show all your work

Equity analysts predict Angel will pay its first annual dividend of $0.02 in 2021. The dividend...

Equity analysts predict Angel will pay its first annual dividend of $0.02 in 2021. The dividend in 2022 is expected to be 25% larger than the 2021 dividend as the company’s cash flows grow substantially. Beyond 2022 the dividend is expected to increase by 4% p.a. forever. If the required return is 12%, then what is the fair value of an Angel share today, in 2019?

Lincoln Motors does not pay dividends currently but plans to pay its first dividend of $1.00...

Lincoln Motors does not pay dividends currently but plans to pay its first dividend of $1.00 three years from today (D3). The dividend will grow at 10% in years 4 and 5 and after year 5 will grow at 3% forever. Find the price per share of Lincoln Motors if the required rate of return is 8%.

Elvis Inc. common stock is expected to pay their first dividend of $2 at the end...

Elvis Inc. common stock is expected to pay their first dividend of $2 at the end of two years from today. Once the firm starts paying dividends, analysts expect the dividends to grow at a supernormal rate of 8% for the next year, and then attain a constant growth of 2% forever thereafter. The required rate of return on the stock is 7.5%. a) What is the value of Elvis Inc.'s stock today? b) In addition to the regular dividend...

Tetra, Inc., is expected to pay $9.1 to its shareholders as the annual dividend at the...

Tetra, Inc., is expected to pay $9.1 to its shareholders as the annual dividend at the end of this year. Simultaneously, the company announced that future dividends will be increasing by 5.7 percent. If you require a rate of return of 11.0 percent, how much are you willing to pay today to purchase one share of the company's stock? 148.51 171.7 191.88 145.47 143.33

Subjects