In: Finance

Variable Dividend Stock is expected to pay dividends of $2, $,2, $,3, $4, and $4 over the next five years. After that the dividend is expected to grow at a constant rate of 4%. If the return on the stock is 9%, what is the price?

Use formulas and show step by step with calculations.

(Stocks) A stock with a beta of 2.95 is expected to pay a $0.98
dividend over the next year. The dividends are expected to grow at
1.88% per year forever. What is the stock's value per share (to the
nearest cent, no $ symbol) if the risk-free rate is 0.32% and the
market risk premium (i.e., the difference between the market return
and the risk-free rate) is 5.86%?
Note: You first need to find the required rate of
return (r)...

(Stocks) A stock with a beta of 1.76 is expected to pay a $1.97
dividend over the next year. The dividends are expected to grow at
2.38% per year forever. What is the stock's value per share (to the
nearest cent, no $ symbol) if the risk-free rate is 0.58 and the
market risk premium (i.e., the difference between the market return
and the risk-free rate) is 6.27%?
Note: You first need to find the required rate of
return (r)...

Miltmar Corporation will pay a year-end dividend of $4, and
dividends thereafter are expected to grow at the constant rate of
6% per year. The risk-free rate is 6%, and the expected return on
the market portfolio is 12%. The stock has a beta of 0.86.
a. Calculate the market capitalization rate.
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
Market capitalization rate.
%
b. What is the intrinsic value of the stock?
(Do not...

Apple stock sells at $186.18 and is not expected to pay any
dividend over the next six months. The 6-month $180-strike call is
selling at $27.90. The risk-free rate is 3% per annum continuously
compounded. Options considered here are assumed to be of European
style.
a) What is the theoretical price of the 6-month put?
b) The 6-month put is selling at $17.80 in the market. How would
you undertake this arbitrage opportunity? Show the cash ﬂow
table.
c) How...

A stock is expected to pay the following dividends: $1.10 in 4
years, $1.70 in 5 years, and $1.75 in 6 years, followed by growth
in the dividend of 5% per year forever after that point. There will
be no dividends prior to year 4. The stock's required return is
11%. The stock's current price should be $_________.
* DO NOT ROUND INTERMEDIATE VALUES, NO CREDIT WILL BE GIVEN
* FINAL ANSWER IN DOLLARS, ROUNDED TO TWO DECIMAL PLACES

A stock is expected to pay a dividend of $2 per share in three
months. The share price is $75, and the risk-free rate of interest
is 8% per annum with continuous compounding for all maturities. An
investor has just taken a long position in a six-month forward
contract on a share of stock.
a) What are the forward price and the initial value of the
forward contract?
b) Three months later, immediately after the payment of the
dividend, the...

A stock is expected to pay a dividend of €2 per share in 9
months. The stock price is €20, and the risk-free rate of interest
is 5% per annum with continuous compounding for all maturities. An
investor has just taken a long position in a 12-month forward
contract on the stock. What is the Forward price (K)?

Constant Dividend Growth Valuation
Crisp Cookware's common stock is expected to pay a dividend of
$3 a share at the end of this year (D1 = $3.00); its
beta is 0.9. The risk-free rate is 2.6% and the market risk premium
is 5%. The dividend is expected to grow at some constant rate,
gL, and the stock currently sells for $80 a share.
Assuming the market is in equilibrium, what does the market believe
will be the stock's price at...

Financial Technology Corp. is expected to pay a dividend of
$3.30 today but dividends are expected to grow at 5% per year going
forward. The required return is 9.5%. What is the price expected to
be in year 4?

A stock is expected to pay the following dividends: $1 in 1
year, $1.5 in 2 years, and $1.8 in 3 years, followed by growth in
the dividend of 7% per year forever after that point. The stock's
required return is 14%. The stock's current price (Price at year 0)
should be $____________.
A stock is expected to pay the following dividends: $1.3
four years from now, $1.5 five years from now,
and $1.8 six years from now, followed by...

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