Question

The In-Tech Co. just paid a dividend of $1 per share. Analysts expect its dividend to grow at 25% per year for the next three years and then at a constant growth rate per year thereafter. The estimate of the constant growth rate of dividends is based on the long term return of equity 25% and payout ratio 80%. If the required rate of return on the stock is 18%, what is the current value of the stock? Clearly show the inputs and equations used to drive your answer to get full credits

Answer #1

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21. Solar Co. just paid a dividend of $1.60. Analysts expect the
company's dividend to
grow by 12% for 3 years and then the rate of growth changes to 6%
per year from Year 4
onwards. Determine the value of this stock if the required rate of
return is 8%?
(a) What is the total present value of the dividends for the
first 3 years (stage I)
(b) What is the present value of cash flows during the stage...

Mack Industries just paid a dividend of $5 per share (D0 = $5).
Analysts expect the
company’s dividend to grow 7 percent this year (D1 = $5.35) and
5 percent next year.
After two years the dividend is expected to grow at a constant
rate of 5 percent. The
required rate of return on the company’s stock is 15
percent. What should be the
company’s current stock price?

A company just paid a dividend of D0 = $3.75.
Analysts expect the company's dividend to grow by 30% this year, by
10% in Year 2, and at a constant rate of 5% in Year 3 and
thereafter. The required return on this low-risk stock is 9.00%.
What is the best estimate of the stock’s current market value?

Analysts expect MC, Co. to maintain a dividend payout
ratio of 35% and enjoy an expected growth rate of 12% per year for
the next 5 years. After the fifth year, all earnings will be paid
out as dividends. The required rate of return on MC, Co equity is
8%. Given that the last dividend paid was $0.5, at what price would
the analysts currently value the stock under their own
expectations?

Ralph Industries just paid a dividend of D0 = $1. 5. Analysts
expect the company's dividend to grow by 30% this year, by 10% in
Year 2, and at a constant rate of 5% in Year 3 and thereafter. The
required return on this low-risk stock is 9%. What is the best
estimate of the stock’s current market value? *
a) $50.20
b) $50.98
c) $60.98
d) $45.80

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...

Library Co. just paid a dividend of $2.75 per share. The
analysts’ consensus is that its dividends will be increased by 4%
next year. Dividends are expected to grow at the rate of 3% per
year, forever, after that. For this problem, assume a market
capitalization rate (k) of 10%.
- Calculate Library’s dividends per share in years 1, 2 and
3.
- Calculate the intrinsic value of a share of Library Co.
today.

Nachman Industries just paid a dividend of D0 =
$2.50. Analysts expect the company's dividend to grow by 30% this
year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and
thereafter. The required return on this low-risk stock is 9.00%.
What is the best estimate of the stock’s current market value? Do
not round intermediate calculations.
Please show work

A company just paid a dividend of $1.30 per share. The consensus
forecast of financial analysts is a dividend of $1.70 per share
next year and $2.30 per share two years from now. Thereafter, you
expect the dividend to grow 4% per year indefinitely into the
future. If the required rate of return is 11% per year, what would
be a fair price for this stock today? (Answer to the nearest
penny.)

Barden Corp. just paid a dividend of D0 = $1.50.
Analysts expect the company's dividend to grow by 30% for the next
two years and at a constant rate of 5% in Year 3 and thereafter.
The required return on this stock is 9.00%. What is the best
estimate of the stock’s current fair value?
a. $47.09
b. $49.43
c. $54.99
d. $59.93
e. $68.45

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