Question

Singing Fish Fine Foods has a current annual cash dividend policy of ​$3.50. The price of...

Singing Fish Fine Foods has a current annual cash dividend policy of ​$3.50. The price of the stock is set to yield a return of 10%. What is the price of this stock if the dividend will be paid

a. for 10 ​years?

b.  for 16 ​years?

c.  for 41 ​years?

d.  for 60 ​years?

e.  for 100 ​years?

f.  ​forever?

Homework Answers

Answer #1

Here we have to calculate PV of Annuity for corresponding years.

Formula for PV of Annuity

a. for 10 years

Price = 3.5 * { [ 1 - {1 / (1+0.1)^10 } ] / 0.1}

= 3.5 * { [1 - {1 / 2.5937} ] / 0.1}

= 3.5 * { [ 1- 0.3855 ] / 0.1 }

= 3.5 * { 6.144}

Price = $ 21.50

b. for 16 years

Price = 3.5 * { [ 1 - {1 / (1+0.1)^16 } ] / 0.1}

= 3.5 * { [1 - {1 / 4.59497} ] / 0.1}

= 3.5 * { [ 1- 0.2176 ] / 0.1 }

= 3.5 * { 7.824}

Price = $ 27.38

c. for 41 years

Price = 3.5 * { [ 1 - {1 / (1+0.1)^41 } ] / 0.1}

= 3.5 * { [1 - {1 / 49.7852} ] / 0.1}

= 3.5 * { [ 1- 0.020086 ] / 0.1 }

= 3.5 * {9.8}

Price = $ 34.3

d. for 60 years

Price = 3.5 * { [ 1 - {1 / (1+0.1)^60 } ] / 0.1}

= 3.5 * { [1 - {1 / 304.4816} ] / 0.1}

= 3.5 * { [ 1- 0.0033 ] / 0.1 }

= 3.5 * {9.967}

Price = $ 34.89

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Singing Fish Fine Foods has a current annual cash dividend policy of ​$3.00. The price of...
Singing Fish Fine Foods has a current annual cash dividend policy of ​$3.00. The price of the stock is set to yield a return of 10%. What is the price of this stock if the dividend will be paid a. for 11 years? b. for 16 years? c. for 40 years? d. for 60 years? e. for 100 years? f. for forever?
Singing Fish Fine Foods has a current annual cash dividend policy of $4.00.The price of the...
Singing Fish Fine Foods has a current annual cash dividend policy of $4.00.The price of the stock is set to yield a return of 14 %. What is the price of this stock if the dividend will be paid a.  for 12 ​years? b.  for 15 years? c.  for 41 ​years? d.  for 60 ​years? e.  for 100 years? f.  ​forever?
Singing Fish Fine Foods has a current annual cash dividend policy of ​$3.75. The price of...
Singing Fish Fine Foods has a current annual cash dividend policy of ​$3.75. The price of the stock is set to yield a return of 12%. What is the price of this stock if the dividend will be paid a.  for 10 ​years? b.  for 15 ​years? c.  for 42 ​years? d.  for 60 ​years? e.  for 100 ​years? f.  ​forever?
Singing Fish Fine Foods has a current annual cash dividend policy of ?$2.00. The price of...
Singing Fish Fine Foods has a current annual cash dividend policy of ?$2.00. The price of the stock is set to yield a return of 10 %. What is the price of this stock if the dividend will be paid a. for 12 ?years? b. for 17 ?years? c. for 42 ?years? d. for 60 ?years? e. for 100 ?years? f. ?forever?
Singing Fish Fine Foods has a current annual cash dividend policy of ​$2.75. The price of...
Singing Fish Fine Foods has a current annual cash dividend policy of ​$2.75. The price of the stock is set to yield a return of 10%. What is the price of this stock if the dividend will be paid a for 10 years? for 17 ​years? c.  for 42 ​years? d.  for 60 ​years? e.  for 100 ​years?
Pfender Guitars has a current annual cash dividend policy of ​$4.00. The price of the stock...
Pfender Guitars has a current annual cash dividend policy of ​$4.00. The price of the stock is set to yield a return of 8​%. What is the price of this stock if the dividend will be paid: a.  for 8 years and then the company repurchases the stock for $35​? b.  for 11 years and then the company repurchases the stock for $35​? c.  for 50 years and then the company repurchases the stock for $35​? d.  for 60 years...
Pfender Guitars has a current annual cash dividend policy of $4.00. The price of the stock...
Pfender Guitars has a current annual cash dividend policy of $4.00. The price of the stock is set to yield a return of 11​%. What is the price of this stock if the dividend will be paid: A. 10 years and then the company repurchases the stock for $35 B. 15 years and then the company repurchases the stock for $35 C. 40 years and then the company repurchases the stock for $35 D. years and then the company repurchases...
Pfender Guitars has a current annual cash dividend policy of ​$6.00. The price of the stock...
Pfender Guitars has a current annual cash dividend policy of ​$6.00. The price of the stock is set to yield a return of 12​%. What is the price of this stock if the dividend will be paid a. for 9 years and then the company repurchases the stock for ​$25​? b.for 13 years and then the company repurchases the stock for ​$25​?   c.for 40 years and then the company repurchases the stock for ​$25​? d.for 60 years and then the...
NPV unequal lives. Singing Fish Fine Foods has ​$1,920,000 for capital investments this year and is...
NPV unequal lives. Singing Fish Fine Foods has ​$1,920,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the​ store's deli section for additional food service. The estimated​ after-tax cash flow of this project is ​$570,000 per year for the next five years. Project 2 is updating the​ store's wine section. The estimated annual​ after-tax cash flow for this project is ​$530,000 for the next six years. If the appropriate discount...
Singing Fish Fine Foods has ​$1,840,000 for capital investments this year and is considering two potential...
Singing Fish Fine Foods has ​$1,840,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the​ store's deli section for additional food service. The estimated​ after-tax cash flow of this project is ​$620,000 per year for the next five years. Project 2 is updating the​ store's wine section. The estimated annual​ after-tax cash flow for this project is ​$480,000 for the next six years. If the appropriate discount rate for the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT