Question

Ocean Holding Corp's expected year-end dividend (D_1) is $4.00, and its required return is 11%. The company's dividend yield is 5.6%, and its growth rate is expected to be constant in the future. What is the firm's stock price? Your answer should be between 42.36 and 108.62, rounded to 2 decimal places, with no special characters.

Answer #1

Dividend Yield = Current Dividend / Current Price =
D_{0} / P_{0} {Equation 1}

As we know, according to the Gordon Growth Model P_{0} =
D_{1} / R - g, where R is required return and g is the
constant growth rate. Putting the value of P_{0} in
equation 1.

Dividend Yield = D_{0} / [D_{1} / R - g] =
D_{0} (R - g) / D_{1} {Equation 2}

Also, D_{1} = D_{0} (1 + g). Putting this in
equation 2.

Dividend Yield = D_{0} (R - g) / D_{0} (1 + g)
=

So, we get Dividend Yield = (R - g) / (1 + g)

.056 = (0.11 - g) / (1 + g)

.056 (1 + g) = 0.11 - g

.056 + .056g = 0.11 - g

.056g + g = 0.11 - .056

1.056g = .054

g = .054 / 1.056

g = .051136

Now, Using the Gordon Growth Model

P_{0} = 4 / (.11 - .051136)

Price = $67.95

Sorenson Corp.'s expected year-end dividend is D1 =
$1.60, its required return is rs = 11.00%, its growth
rate is 5.00%, and its growth rate is expected to be constant in
the future. What is Sorenson's expected stock price in 9 years,
i.e., what is P9?

The last dividend of a company is $2.25. The required rate of
return is 10.75% and expected constant growth rate is 3.50%. What
is the expected stock price, dividend, capital gains yield and
dividend yield for the next three years? If you know a company's
required rate of return is 11.50% and its expected constant growth
rate is 4.50%, what is the expected dividend yield?

The
stock is expected to pay a dividend of $1.25 at the end of the
year. The required rate of return is RS = 11%, and the expected
constant growth rate is G = 5%. What is the Stocks one year from
today?

Find a fair stock price if the current dividend is $4.00 per
share, required return on equity is 12% and growth rate in future
dividends is 3.5%.

Firm A is expected to pay a dividend of $1.30 at the end of the
year. The required rate of return is 11%. Other things held
constant, what would the stock’s price be if the dividend growth
rate is expected to be 6%?

The Ramirez Company's last dividend was $1.3. Its dividend
growth rate is expected to be constant at 25% for 2 years, after
which dividends are expected to grow at a rate of 6% forever. Its
required return (rs) is 11%. What is the best estimate of the
current stock price?
$43.92
$38.06
$40.99
$46.85
$35.14

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)?

ABC Company's last dividend was $3.5. The dividend growth rate
is expected to be constant at 6% for 4 years, after which dividends
are expected to grow at a rate of 4% forever. The firm's required
return (rs) is 9%. What is its current stock price (i.e. solve for
Po)?

Consider four different stocks, all of which have a required
return of 18.25 percent and a most recent dividend of $3.60 per
share. Stocks W, X, and Y are expected to maintain constant growth
rates in dividends for the foreseeable future of 10 percent, 0
percent, and –5 percent per year, respectively. Stock Z is a growth
stock that will increase its dividend by 20.25 percent for the next
two years and then maintain a constant 12 percent growth rate,...

Tresnan Brothers is expected to pay a $3.19 dividend on its
common stock at at the end of this year. This company's dividends
are expected to grow at a constant rate of 4% per year. If the
required rate of return on the stock is 10.94%, what is the stock's
current value per share? (your answer should be to two decimal
places)

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 7 minutes ago

asked 20 minutes ago

asked 28 minutes ago

asked 48 minutes ago

asked 54 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago