Question

1.)Seagate Technology is a global leader in data storage solutions and a​ high-yield dividend payer. From 2015 through 2019​,

Seagate paid the following​ per-share dividends:

Year             Dividen

2019           2.56

2018           2.29

2017            1.82

2016            1.18

2015             1.56

Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 21​%   
required rate of return to find the value of​ Seagate's stock immediately after it paid its2019  
dividend of$2.56

2.)

 Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public​ offering, managers at Nabor have decided to make their own estimate of the​ firm's common stock value. The​ firm's CFO has gathered data for performing the valuation using the free cash flow valuation model. The​ firm's weighted average cost of capital is 13 %​, and it has $ 2,150, 000 of debt at market value and

$ 430,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5​ years, 2020 through 2024, are given in the​ table,

2020   $260,000
2021   $310,000
2022   $350,000
2023   $410,000
2024   $490,000

Beyond 2024 to​ infinity, the firm expects its free cash flow to grow by 4 % annually.

a.  Estimate the value of Nabor​ Industries' entire company by using the free cash flow valuation model. b.  Use your finding in part a​, along with the data provided​ above, to find Nabor​ Industries' common stock value. c.  If the firm plans to issue 200 comma 000shares of common​ stock, what is its estimated value per​ share?

3.)Given the following information for the stock of Foster​ Company, calculate the risk premium on its common stock. 

Current price per share of common stock   $56.96
Expected dividend per share next year   $4.74
Constant annual dividend growth rate   6.6%
Risk-free rate of return   7.3%

The risk premium on Foster stock is:

Answer 1

Here multiple questions posted and as per policy we have to solve one but i am doing 1 and 3
1)growth=16.87%
return=21%
dividend(d0)=2.56
stock price=D0*(1+g)/(k-g)
=2.56*(1+16.87%)/(21%-16.87%)
=72.44

3) current price= expected dividend next year/(return-growth rate)
56.96=4.74/(k-6.6%)
k=14.92%
k= risk free rate+risk premium
risk premium=14.92%-7.3%=7.62%