Question

The Down and Out Co. just issued a dividend of $2.71 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $45 a share, what is the company's cost of equity? Sample answer format: 2 decimals (unless integer) with NO %. 1.23% will be presented as 1.23 and 2.00% (integer) presented as 2.

Answer #1

cost of equity = 12.38% or 12.38

The Down and Out Co. just issued a dividend of $2.81 per share
on its common stock. The company is expected to maintain a constant
5 percent growth rate in its dividends indefinitely. If the stock
sells for $45 a share, what is the company's cost of equity?
(Do not round your intermediate calculations.)
11.24%
6.67%
12.13%
11.56%
10.98%

The next dividend payment by Blue Cheese, Inc., will be $1.89
per share. The dividends are anticipated to maintain a growth rate
of 5 percent forever. The stock currently sells for $38 per share.
What is the expected capital gains yield? Sample answer format: 2
decimals (unless integer) with NO %. 1.23% will be presented as
1.23 and 2.00% (integer) presented as 2.

Suppose Powers Ltd. just issued a dividend of $1.20 per share on
its common stock. The company paid dividends of $.85, $.92, $.99,
and $1.09 per share in the last four years.
Required:
If the stock currently sells for $53, what is your best estimate
of the company’s cost of equity capital using arithmetic and
geometric growth rates? (Do not round
intermediate calculations. Enter your answers as a percentage
rounded to 2 decimal places (e.g.,
32.16).)
Cost of
equity
Arithmetic...

Suppose Hornsby Ltd. just issued a dividend of $2.53 per share
on its common stock. The company paid dividends of $2.03, $2.10,
$2.27, and $2.37 per share in the last four years.
If the stock currently sells for $72, what is your best estimate of
the company’s cost of equity capital using arithmetic and geometric
growth rates?

Suppose Stark, Ltd., just issued a dividend of $2.40 per share
on its common stock. The company paid dividends of $1.21, $1.77,
$2.05, and $2.22 per share in the last four years. If the stock
currently sells for $47, what is your best estimate of the
company’s cost of equity capital using the arithmetic average
growth rate in dividends?
Select one:
A. 19.63%
B. 15.41%
C. 17.48%
D. 16.36%
E. 17.70%

Suppose Stark Ltd. just issued a dividend of $2.35 per share on
its common stock. The company paid dividends of $1.90, $2.09,
$2.16, and $2.27 per share in the last four years.
If the stock currently sells for $50, what is your best estimate
of the company’s cost of equity capital using the arithmetic
average growth rate in dividends? (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
Cost of equity...

Company just issued a dividend of $1.60 per share on its stock.
The company is expected to have a constant 5 percent growth rate in
dividends. Use the constant growth model from chapter 7. Yes the
class material builds on itself. Required: If the stock sells for
$40 a share, what is the company’s cost of equity? (Do not round
intermediate calculations. Enter your answer as a percentage
rounded to 2 decimal places (e.g., 32.16).)

Storico Co. just paid
a dividend of $2.00 per share. The company will increase its
dividend by 20 percent next year and then reduce its dividend
growth rate by 5 percentage points per year until it reaches the
industry average of 5 percent dividend growth, after which the
company will keep a constant growth rate forever. If the required
return on the company's stock is 17 percent, what will a share of
stock sell for today? (Do not round intermediate...

The Jackson–Timberlake Wardrobe Co. just paid a dividend of
$1.03 per share on its stock. The dividends are expected to grow at
a constant rate of 2.75 percent per year indefinitely. Investors
require a return of 6.74 percent on the company's stock.
What will the stock price be in 10 years?

The Jackson–Timberlake Wardrobe Co. just paid a dividend of
$1.81 per share on its stock. The dividends are expected to grow at
a constant rate of 1.01 percent per year indefinitely. Investors
require a return of 5.8 percent on the company's stock. What will
the stock price be in 10 years?

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