Question

The current dividend on ALH common stock is $0.85 per share. The market expects the company’s...

The current dividend on ALH common stock is $0.85 per share. The market expects the company’s dividend to grow at 40 percent per year for the next four years and then remain constant (i.e. not grow) thereafter. If investors require an eight percent return to hold this stock, what is its current market price.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Stewart Industries expects to pay a $3.00 per share dividend on its common stock at the...
Stewart Industries expects to pay a $3.00 per share dividend on its common stock at the end of the year (i.e. D1 = $3.00). The dividend is expected to grow 25 percent a year until t = 3, after which time the dividend is expected to grow at a constant rate of 5 percent a year (i.e. D3 = $4.6875 and D4 = $4.9219). The stock’s beta is 1.2, the risk-free rate of interest is 6 percent, and the market...
11. The current market price of a share of common stock is $67.50. The cash dividend...
11. The current market price of a share of common stock is $67.50. The cash dividend paid now is $5 [ D0 ]. The dividends are expected to grow at a constant rate of 8% per year for ever. The required rate of return on the common stock is 16%. Then the following is true according to the constant dividend growth model:     a. the stock is underpriced   b. the stock is overpriced   c. the stock is correctly priced
A company currently pays a dividend of $3.5 per share. It is estimated that the company’s...
A company currently pays a dividend of $3.5 per share. It is estimated that the company’s dividend will grow at a rate of 22% per year for the next 2 years, then at a constant rate of 7.5% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 8.5%, and the market risk premium is 4.5%. What is your estimate of the stock’s current price?
Co. just paid a dividend of $1.30 on each share of its stock. The company expects...
Co. just paid a dividend of $1.30 on each share of its stock. The company expects that the dividends will increase at a constant rate of 4 percent per year in perpetuity. Investors require a 14 percent return on this company's stock. Calculate the current stock price. Calculate the stock price in three years. Calculate the stock price in 12 years.
Sea Side, Inc., just paid a dividend of $2.32 per share on its stock. The growth...
Sea Side, Inc., just paid a dividend of $2.32 per share on its stock. The growth rate in dividends is expected to be a constant 5.9 percent per year indefinitely. Investors require a return of 22 percent on the stock for the first three years, then a return of 17 percent for the next three years, and then a return of 15 percent thereafter. What is the current share price? (Do not round intermediate calculations. Round your answer to 2...
Sea Side, Inc., just paid a dividend of $2.24 per share on its stock. The growth...
Sea Side, Inc., just paid a dividend of $2.24 per share on its stock. The growth rate in dividends is expected to be a constant 6.3 percent per year indefinitely. Investors require a return of 20 percent on the stock for the first three years, then a return of 15 percent for the next three years, and then a return of 13 percent thereafter. What is the current share price? (Do not round intermediate calculations. Round your answer to 2...
Sea Side, Inc., just paid a dividend of $2.24 per share on its stock. The growth...
Sea Side, Inc., just paid a dividend of $2.24 per share on its stock. The growth rate in dividends is expected to be a constant 6.3 percent per year indefinitely. Investors require a return of 20 percent on the stock for the first three years, then a return of 15 percent for the next three years, and then a return of 13 percent thereafter. What is the current share price? (Do not round intermediate calculations. Round your answer to 2...
Sea Side, Inc., just paid a dividend of $1.68 per share on its stock. The growth...
Sea Side, Inc., just paid a dividend of $1.68 per share on its stock. The growth rate in dividends is expected to be a constant 5.5 percent per year indefinitely. Investors require a return of 18 percent on the stock for the first three years, then a return of 13 percent for the next three years, and then a return of 11 percent thereafter. What is the current share price? (Do not round intermediate calculations. Round your answer to 2...
Hubbard Industries just paid a common dividend, D0, of $1.20. It expects to grow at a...
Hubbard Industries just paid a common dividend, D0, of $1.20. It expects to grow at a constant rate of 2% per year. If investors require a 12% return on equity, what is the current price of Hubbard's common stock? Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.30 at the end of each year. If investors require an 6% return on the preferred stock, what is the price of the firm's perpetual preferred stock?...
1. Sky High Co. just paid a dividend of $2.0 per share on its stock. The...
1. Sky High Co. just paid a dividend of $2.0 per share on its stock. The dividends are expected to grow at a constant rate of 2 percent per year indefinitely. If investors require an 8.6 percent return on Sky High Co. stock, the current price is $ _________ . Round it to two decimal places 2. Sky High Co. just paid a dividend of $4.6 per share on its stock (D0). The dividends are expected to grow at a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT