Question

A fast growth share has the first dividend (t=1) of $1.31. Dividends are then expected to...

A fast growth share has the first dividend (t=1) of $1.31. Dividends are then expected to grow at a rate of 5 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 3.4 percent. . If the required rate of return is 18 percent, what is the current price of the share? (to the nearest cent)

Select one:

a. $9.30

b. $25.61

c. $8.97

d. $6.13

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The current share price is equal to the present value of future dividends

The curent share price = $9.30

Option A is correct

Screenshot with formulas

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
A fast growth share has the first dividend (t=1) of $2.61. Dividends are then expected to...
A fast growth share has the first dividend (t=1) of $2.61. Dividends are then expected to grow at a rate of 10 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 2.1 percent. . If the required rate of return is 19 percent, what is the current price of the share? (to the nearest cent)
A fast growth share has the first dividend (t=1) of $2.35. Dividends are then expected to...
A fast growth share has the first dividend (t=1) of $2.35. Dividends are then expected to grow at a rate of 8 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 3.0 percent. . If the required rate of return is 14 percent, what is the current price of the share? (to the nearest cent) Select one: a. $24.03 b. $53.84 c. $21.36 d. $26.44
A company has just paid its first dividend of $2.46. Next year's dividend is forecast to...
A company has just paid its first dividend of $2.46. Next year's dividend is forecast to grow by 9 percent, followed by another 9 per cent growth in year two. From year three onwards dividends are expected to grow by 2.3 percent per annum, indefinitely. Investors require a rate of return of 14 percent p.a. for investments of this type. The current price of the share is (round to nearest cent) Select one: a. $24.26 b. $22.02 c. $12.22 d....
A company has just paid its first dividend of $3.45. Next year's dividend is forecast to...
A company has just paid its first dividend of $3.45. Next year's dividend is forecast to grow by 5 percent, followed by another 5 per cent growth in year two. From year three onwards dividends are expected to grow by 2.8 percent per annum, indefinitely. Investors require a rate of return of 15 percent p.a. for investments of this type. The current price of the share is (round to nearest cent) Select one: a. $30.26 b. $27.38 c. $13.84 d....
A company has just paid its first dividend of $2.05. Next year's dividend is forecast to...
A company has just paid its first dividend of $2.05. Next year's dividend is forecast to grow by 9 percent, followed by another 9 per cent growth in year two. From year three onwards dividends are expected to grow by 3.0 percent per annum, indefinitely. Investors require a rate of return of 15 percent p.a. for investments of this type. The current price of the share is (round to nearest cent) Select one: a. $19.59 b. $17.75 c. $9.53 d....
A company has just paid its first dividend of $3.71. Next year's dividend is forecast to...
A company has just paid its first dividend of $3.71. Next year's dividend is forecast to grow by 9 percent, followed by another 9 per cent growth in year two. From year three onwards dividends are expected to grow by 2.2 percent per annum, indefinitely. Investors require a rate of return of 16 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)
A company has just paid its first dividend of $3.03. Next year's dividend is forecast to...
A company has just paid its first dividend of $3.03. Next year's dividend is forecast to grow by 9 percent, followed by another 9 per cent growth in year two. From year three onwards dividends are expected to grow by 2.5 percent per annum, indefinitely. Investors require a rate of return of 14 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)
Revarop, Inc., is a fast-growth company that is expected to grow at a rate of 23...
Revarop, Inc., is a fast-growth company that is expected to grow at a rate of 23 percent for the next four years. It is then expected to grow at a constant rate of 6 percent. Revarop's first dividend, of $4.25, will be paid in Year 3. If the required rate of return is 17 percent, what is the current value of the stock if dividends are expected to grow at the same rate as the company? Please include steps on...
Carla Vista, Inc., is a fast-growth company that is expected to grow at a rate of...
Carla Vista, Inc., is a fast-growth company that is expected to grow at a rate of 23 percent (per year) for the next four years. It is then expected to grow at a constant rate of 6 percent. Carla Vista’s first dividend, of $3.60, will be paid in year 3. If the required rate of return is 20 percent, what is the current value of the stock if dividends are expected to grow at the same rate as the company?...
Problem 8-18 Supernormal Growth [LO1] Synovec Co. is growing quickly. Dividends are expected to grow at...
Problem 8-18 Supernormal Growth [LO1] Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 14 percent, and the company just paid a dividend of $2.50, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current Share Price = ?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT