Question

ABC expects to pay a dividend one year from now of $2.97. The dividend exhibits constant...

ABC expects to pay a dividend one year from now of $2.97. The dividend exhibits constant growth of 11.1%, and the current price of the stock is $96.92. Given all of this information, what is the expected rate of return for this stock under the Discounted Cash Flow model? (Show your answer as a decimal to four places, e.g., if you got 12.34% then input 0.1234)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Expected rate of return ( r) D1÷P0+g
Here,
Net stock price (P0) $                          96.92
Expected dividend (D1) $                            2.97
Growth rate (g) 11.10%
Expected rate of return ( r)           0.1416
2.97/96.92+11.1%
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
ABC expects to pay a dividend one year from now of $2.73. The dividend exhibits constant...
ABC expects to pay a dividend one year from now of $2.73. The dividend exhibits constant growth of 7.9%, and the current price of the stock is $46.48. Given all of this information, what is the expected rate of return for this stock under the Discounted Cash Flow model? (Show your answer as a decimal to four places, e.g., if you got 12.34% then input 0.1234)
ABC company has a current stock price of $40.00 and expects to pay a dividend in...
ABC company has a current stock price of $40.00 and expects to pay a dividend in one ONE year of $1.80. The dividend is expected to grow at a constant rate of 6% annually. ABC Company has a beta of 0.95, the market is expected to return to 11%, and the risk-free rate of interest is 4%. The expected stock price two years from today is closest to: A:$41.03 B.$43.38 C.$43.49 D. $43.94
Use the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend...
Use the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $15.85 per share in one year. ELO shares are currently trading for $238.35 on the NYSE, and the expected annual rate of return for ELO shares is 11.11%. Answer as a % to 2 decimal places (e.g., 12.34% as 12.34).
ABC Corporation expects to pay a dividend of $2 per share next year, and the dividend...
ABC Corporation expects to pay a dividend of $2 per share next year, and the dividend payout ratio is 80 percent. Dividends are expected to grow at a constant rate of 8 percent forever.Suppose the company's equity beta is 1.21, the market risk premius is 9%, and the risk free rate is 5%. Calculate the present value of growth opportunities.
ABC Corporation expects to pay a dividend of $2 per share next year, and the dividend...
ABC Corporation expects to pay a dividend of $2 per share next year, and the dividend payout ratio is 80 percent. Dividends are expected to grow at a constant rate of 8 percent forever.Suppose the company's equity beta is 1.21, the market risk premius is 9%, and the risk free rate is 5%. Calculate the present value of growth opportunities.
A stock is expected to pay a dividend of $2.3 one year from now, and the...
A stock is expected to pay a dividend of $2.3 one year from now, and the same amount every year thereafter. The stock's required return (indefinitely) is expected to be 9.5%. The stock's predicted price exactly 5 years from now, P5, should be $_______________. A stock is expected to pay a dividend of $1.2 one year from now, $1.6 two years from now, and $2.4 three years from now. The growth rate in dividends after that point is expected to...
Weaver Chocolate Co. expects to pay a $2.275 dividend in the upcoming year, its expected constant...
Weaver Chocolate Co. expects to pay a $2.275 dividend in the upcoming year, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $32.50 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? A. 15.48% B. 14.74% C. 12.70% D. 13.37% E. 14.04%
ABC Inc. will pay a dividend of $7.50 next year (one year from today). The market...
ABC Inc. will pay a dividend of $7.50 next year (one year from today). The market believes the dividend will grow at a constant rate of 4%, forever. ABC's stock price is currently $58.59. As an investor, your required rate of return for ABC Inc. is _____________%.
A stock just paid an annual dividend of $9.53 per share. The expected growth rate of...
A stock just paid an annual dividend of $9.53 per share. The expected growth rate of the dividend is 5.38%. The required rate of return for the stock is 8.88% per annum. Based on the Constant Dividend Growth Model, what is the expected dividend yield for the stock for the coming year? Answer as a percentage, 2 decimal places (e.g., 12.34% as 12.34).
ABC Company's last dividend was $0.7. The dividend growth rate is expected to be constant at...
ABC Company's last dividend was $0.7. The dividend growth rate is expected to be constant at 7% for 4 years, after which dividends are expected to grow at a rate of 4% forever. The firm's required return (rs) is 15%. What is its current stock price (i.e. solve for Po)?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT