Question
In: Finance
Part a. Green Tree Corporation is paying a dividend of $4 today. It expects dividends to...
Part a. Green Tree Corporation is paying a dividend of $4 today. It expects dividends to grow at 25 percent for the next three years and to stabilize at 10 percent per year thereafter. If the required rate of return of this corporation is 15 percent, what is the current price of this corporation's stock? (Answer must be shown in excel)
Part b. What percentage of the current stock price is due to the dividends in the first three years?
Part c. What percentage of the current stock price is due to the dividends from Year 4 onwards?
| Part d. Discuss the results of Parts b and c above. (2 points) |
Solutions
jeff jeffy answered 11 months agoRelated Solutions
Part a. Green Tree Corporation is paying a dividend of $4 today. It expects dividends to...
Part a. Green Tree Corporation is paying a dividend of $4 today.
It expects dividends to grow at 25 percent for the next three years
and to stabilize at 10 percent per year thereafter.
a. If the required rate of return of this corporation is 15
percent, what is the current price of this corporation's stock?
b. What percentage of the current stock price is due to the
dividends in the first three years?
c. What percentage of the current...
Green Tree Corporation is paying a dividend of $4 today. It expects dividends to grow at...
Green Tree Corporation is paying a dividend of $4 today. It
expects dividends to grow at 25 percent for the next three years
and to stabilize at 10 percent per year thereafter. If the required
rate of return of this corporation is 15 percent, what is the
current price of this corporation's stock? What percentage of the
current stock price is due to the dividends in the first three
years? What percentage of the current stock price is due to...
Orca, Inc. announced today that it will begin paying annual dividends. The first dividend will be...
Orca, Inc. announced today that it will begin paying annual
dividends. The first dividend will be paid next year in the amount
of $1.5 a share. The following dividends will be $1.31, $1.58, and
$2.17 a share annually for the following three years, respectively.
After that, dividends are projected to increase by 3.8 percent per
year. How much are you willing to pay today to buy one share of
this stock if your required rate of return is 10.5 percent?
NU YU announced today that it will begin paying annual dividends. The first dividend will be...
NU YU announced today that it will begin paying annual
dividends. The first dividend will be paid next year in the amount
of .57 a share. The following dividends will be .62, .77, and 1.07
a share annually for the following three years. After that,
dividends are projected to increase by 3.8 percent per year. How
much are you willing to pay today to buy one share of this stock if
your desired rated of return is 12 percent
CEPS Group announced today that it will begin paying annual dividends next year. The first dividend...
CEPS Group announced today that it will begin paying annual
dividends next year. The first dividend will be OMR 0.52 a share.
The following dividends will be OMR 0.67, OMR 0.72, OMR 0.81, and
OMR 0.90 a share annually for the following 4 years, respectively.
After that, dividends are projected to increase by 5 percent per
year. How much are you willing to pay to buy one share of this
stock today if your desired rate of return is 9.5...
CEPS Group announced today that it will begin paying annual dividends next year. The first dividend...
CEPS Group announced today that it will begin paying annual
dividends next year. The first dividend will be OMR 0.65 a share.
The following dividends will be OMR 0.72, OMR 0.85, OMR 0.89, and
OMR 0.95 a share annually for the following 4 years, respectively.
After that, dividends are projected to increase by 4 percent per
year. How much are you willing to pay to buy one share of this
stock today if your desired rate of return is 11.5...
CEPS Group announced today that it will begin paying annual dividends next year. The first dividend...
CEPS Group announced today that it will begin paying annual
dividends next year. The first dividend will be OMR 0.25 a share.
The following dividends will be OMR 0.27, OMR 0.34, OMR 0.45, and
OMR 0.52 a share annually for the following 4 years, respectively.
After that, dividends are projected to increase by 3 percent per
year. How much are you willing to pay to buy one share of this
stock today if your desired rate of return is 7.5...
CEPS Group announced today that it will begin paying annual dividends next year. The first dividend...
CEPS Group announced today that it will begin paying annual
dividends next year. The first dividend will be OMR 0.25 a share.
The following dividends will be OMR 0.27, OMR 0.34, OMR 0.45, and
OMR 0.52 a share annually for the following 4 years, respectively.
After that, dividends are projected to increase by 3 percent per
year. How much are you willing to pay to buy one share of this
stock today if your desired rate of return is 7.5...
1) IBM expects to pay a dividend of $5 next year and expects these dividends to...
1) IBM expects to pay a dividend of $5 next year and expects
these dividends to grow at 77% a year. The price of IBM is $85 per
share. What is IBM's cost of equity capital?
2) Since your first birthday, your grandparents have been
depositing $1,200into a savings account on every one of your
birthdays. The account pays 9%
interest annually. Immediately after your grandparents make the
deposit on your 18th birthday, the amount of money in your savings...
. Sharon Corporation annolrnced today that it will begin paying annual dividends next year. l-he first...
. Sharon Corporation annolrnced today that it will begin paying
annual dividends next year. l-he first dividend w'ill be RM0.12 a
share. The fblior,ving dividends will be RMO.l5, RM0.20, RM0.50.
and RM0.60 a share annually fbr the tbllowing 4 years,
respectively. Afier that, dividends are projected to increase by 4
percent per year. Horv much are you witling to pay to buy one share
of this stock today if your desired rate of refurn is 8.5
nercent?
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