Question

19. The company just paid a dividend of $2.60 per share on its stock. The dividends are expected to grow at a constant rate of 3% per year forever. The required rate of return for this stock is 15%.What is expected dividend payment at the end of year 4?(Round answers to two decimals, enter your answers without any characters such as "$", or "," such as 1234.78)

12.

A corporate bond offers 9% coupon rate, compounded semi-annually. The maturity left is 7 years. The yield to maturity for bonds with such risks is 10%.

Which one of the following statements is correct?

each coupon payment paid out is $50 per share |
||

10% is the interest rate you use as discount rate to find bond value |
||

each coupon payment paid out is $45 per share |
||

number of total coupon payments till maturity is 7 |

Answer #1

19.

Present dividend is $2.60 per share. The dividend growth rate is 3% per year. Therefore,

Future Dividend = Present Dividen*(1+growth rate)^n, where n is number of year.

= 2.60*(1.03)^4 = 2.9263% or 2.97$(rounded off to two)

12.

10% is the interest rate you use a discount rate to find bond value is the correct statement. We use Yield To Maturity at that point of time to calculate bond value. It is given as 10%.

Explanation of other option :

Coupon payments cannot be found as face value of the bond is not given. Therefore two option of coupon payment are wrong.

Coupon payments till maturity will be 7*2 = 14 as bonds pay semi-annual coupon payments. There this option is wrong

If you have any doubt, ask me in the comment section.

A)
Assume a corporation has just paid a dividend of $ 1.03 per
share. The dividend is expected to grow at a rate of 4.4% per year
forever, and the discount rate is 8.1%.
What is the Capital Gains yield of this stock?
B)
You're analyzing the stock of a certain company. The most recent
dividend paid was $3 dollars per share. The company's discount rate
is 10%, and the firm is expected to grow at 4% per year forever....

Wicked Textiles Inc. just paid its annual dividend of $2.50 per
share. The dividends are expected to grow for the next 2 years at
10% rate, and then slow down to a 4% annual rate forever. If
investors require 15% return:
8) What is the terminal value of Wicked Textiles in Year 2
(P2)?
9) What should be the current stock price of Wicked
Textiles?
10.) What is the current price of a $1,000 par value Treasury
bond maturing in...

A company just paid a dividend of $3.50 per share on its stock.
The dividends are expected to grow at a constant rate of 3.6% per
year. (i) If the required rate of return is 11.6%, what is current
price? (ii) What will be the price of this stock in five years?
(iii) You own 10 stocks of the company., and were planning to hold
these stocks for 5 years before you sell. Suppose your friend is
willing to buy...

Your company just paid a dividend of $4.0 per share. The company
will increase its dividend by 5% next year and will then increase
its dividend growth rate by 2% points per year ( from 5% to 7% to
9% to 11%) until it reaches the industry average of 11% dividend
growth, after which the company will keep a constant growth rate
forever. The required return on your company’s stock is 13%. What
will a share of stock sell for...

APCE common stock just paid a dividend of $1.00 per share, but
its dividend is expected to grow at 10 percent per year for four
years and then grow at 6 percent per year forever. How much should
you be willing to pay for the APCE stock? Assume 12% required
return.
20.24
27.29
16.62
25.83

D Co. has just paid a dividend of 2.50 Baht per share on its
stock. The dividends are expected to grow at a constant rate of 5
percent forever. The stock currently sells for 20 Baht per share.
What are the dividend yield and the expected capital gains
yield?

Assume a corporation has just paid a dividend of $ 4.75 per
share. The dividend is expected to grow at a rate of 4.3% per year
forever, and the discount rate is 8.9%.
What is the dividend yield of this stock?

6. Assume a corporation has just paid a dividend of $ 2.96 per
share. The dividend is expected to grow at a rate of 3.4% per year
forever, and the discount rate is 8.2%.
What is the Capital Gains yield of this stock?

Madison Tour, Inc., just paid a dividend of $3.15 per share on
its stock. The dividends are expected to grow at a constant rate of
6 percent per year, indefinitely. Assume investors require a return
of 11 percent on this stock.
What will the price be in 3 years?

Storico Co. just paid a dividend of $2.45 per share. The company
will increase its dividend by 20 percent next year and will then
reduce its dividend growth rate by 5 percentage points per year
until it reaches the industry average of 5 percent dividend growth,
after which the company will keep a constant growth rate forever.
If the required return on Storico stock is 11 percent, what will a
share of stock sell for today?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 8 minutes ago

asked 16 minutes ago

asked 30 minutes ago

asked 32 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

asked 1 hour ago

asked 1 hour ago