Question

1.What is the price of a share of stock if the dividend next period is expected...

1.What is the price of a share of stock if the dividend next period is expected to be $0.88 per share, the required return is 12% and the dividend growth rate is 2% (both stated as APRs with quarterly compounding)?

2. What is the price of a share of stock if the dividend next period is expected to be $0.88 per share, the required return is 10% and the dividend growth rate is 2% (both stated as APRs with quarterly compounding)?

3. A stock just paid a dividend of $0.75. This quarterly dividend is expected to grow at a rate of 4% in perpetuity. What is the price of the stock if the required return is 12% (all rates are APR with quarterly compounding)?

4. A stock just paid a dividend of $0.75. This quarterly dividend is expected to grow at a rate of 4% for the next 10 years, after which it will remain stable (have zero growth) in perpetuity. What is the price of the stock if the required return is 12% (all rates are APR with quarterly compounding)?

Homework Answers

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
1) A stock just paid a dividend of $0.50. If the dividend is expected to grow...
1) A stock just paid a dividend of $0.50. If the dividend is expected to grow 3% per year, what will the price be if the required return is 9%? 2) A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is 11%, and the expected growth rate is 5%. What is the current stock price? 3) A stock just paid a dividend of $1. The required rate of...
A firm called "Slow Grower" is expected to pay it's shareholders a $1 dividend next quarter,...
A firm called "Slow Grower" is expected to pay it's shareholders a $1 dividend next quarter, and this dividend is expected to grow at a rate of 0.5% APR compounded quarterly. What is the share price if the required return on Slow Grower is 6% APR compounded quarterly? A firm called "Slow Grower" is expected to pay it's shareholders a $1 dividend next quarter, and this dividend is expected to grow at a rate of 0.5% APR compounded quarterly. What...
Murray Telecom just paid a $3.50 per share stock dividend (D0). Dividends are expected to grow...
Murray Telecom just paid a $3.50 per share stock dividend (D0). Dividends are expected to grow at a rate of 8 percent per year for the next 6 years, 4 percent per year for the subsequent 4 years, and then level off into perpetuity at a growth rate of 2 percent per year. Using the dividend growth model, what should be the value of the firm’s common stock if the required rate of return on similar securities is 11.25 percent?
A stock just paid an annual dividend of $1.3. The dividend is expected to grow by...
A stock just paid an annual dividend of $1.3. The dividend is expected to grow by 9% per year for the next 4 years. The growth rate of dividends will then fall steadily from 9% after 4 years to 3% in year 8. The required rate of return is 12%. What is the stock price if the dividend growth rate will stay 3% forever after 8 years?
Murray Telecom paid a $5.00 per share stock dividend last year (D0). These dividends are expected...
Murray Telecom paid a $5.00 per share stock dividend last year (D0). These dividends are expected to grow at a rate of 8 percent per year for the next 4 years, 5 percent per year for the subsequent 2 years, and then level off into perpetuity at a growth rate of 2 percent per year. What should be the value of the firm’s stock if the required rate of return on similar securities is 12 percent? Please show calculations!
Murray Telecom paid a $5.00 per share stock dividend last year (D0). These dividends are expected...
Murray Telecom paid a $5.00 per share stock dividend last year (D0). These dividends are expected to grow at a rate of 8 percent per year for the next 4 years, 5 percent per year for the subsequent 2 years, and then level off into perpetuity at a growth rate of 2 percent per year. What should be the value of the firm’s stock if the required rate of return on similar securities is 12 percent? Please show calculations!
1. What is the price of a share of preferred stock that has a dividend of...
1. What is the price of a share of preferred stock that has a dividend of $3 if the cost of preferred (rp) is 15% 2. What would you pay for a share of common stock if you expect the next dividend to be $3 and you expect to sell it in one year for $25, assuming the cost of equity (re) is 15%. 3. MBV is a cruise line which announced that dividends are expected to grow by 3.5...
Gerdin Inc. just paid out its annual dividend of $2/share. The dividend is expected to grow...
Gerdin Inc. just paid out its annual dividend of $2/share. The dividend is expected to grow at 50% a year for the next 2 years. Afterwards, the annual growth rate will be settled at 5% indefinitely. The required rate of return of the stock is 15%. Find out the expected stock price at the end of year 2. $45 $47.25 $41.74 $43.74 $50
Infosys Technologies just paid a dividend of $3.00 per share, and that dividend is expected to...
Infosys Technologies just paid a dividend of $3.00 per share, and that dividend is expected to grow at a rate of 14% for at least the next few years. If we assume that this growth rate will continue forever (in perpetuity), then the Discounted Dividend Model (DDM) tells us that the value of this stock is negative at a discount rate of 9%. true or false?
1. Stock Values Courageous, Inc. just paid a dividend of $1.80per share on its stock. The...
1. Stock Values Courageous, Inc. just paid a dividend of $1.80per share on its stock. The dividends are expected to grow at a constant rate of 3 percent per year, indefinitely. If investors require a 12 percent return on Courageous stock, what is the current price? What will the price be in 3 years? In 15 years? PART A: Current Price: $____________. PART B: Price in Three Years: $____________. PART C: Price in Fifteen Years: $____________. #4 Stock Values The...