Question

Using the Dividend Valuation Model, calculate the following: What is the value of a common stock...

  1. Using the Dividend Valuation Model, calculate the following:

What is the value of a common stock that paid a $1.50 dividend at the end of the last year and is expected to pay a cash dividend in the future. Dividends are expected to grow at 7% annually and the investor’s required rate of return is 11%.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Using the dividend discount model, calculate the intrinsic value for the stock today. today is 2017,...
Using the dividend discount model, calculate the intrinsic value for the stock today. today is 2017, you have just been paid a dividend and that the next dividends will be received in exactly one year. (dividend is paid annually) the stock price at 2017 was$ 38.3. dividend pay per share is $1.39. you expect the stock to maintain the same dividend payout ratio(60.8399) as 2017 for the next three years. After three years, the company will increase the dividend payout...
​(Common stock valuation​) The common stock of NCP paid ​$ 1.45 in dividends last year. Dividends...
​(Common stock valuation​) The common stock of NCP paid ​$ 1.45 in dividends last year. Dividends are expected to grow at an annual rate of 5.50 percent for an indefinite number of years. a. If​ NCP's current market price is ​$ 27.23 per​ share, what is the​ stock's expected rate of​ return? b. If your required rate of return is 7.5 ​percent, what is the value of the stock for​ you? c. Should you make the​ investment? ​(Round to two...
11. The current market price of a share of common stock is $67.50. The cash dividend...
11. The current market price of a share of common stock is $67.50. The cash dividend paid now is $5 [ D0 ]. The dividends are expected to grow at a constant rate of 8% per year for ever. The required rate of return on the common stock is 16%. Then the following is true according to the constant dividend growth model:     a. the stock is underpriced   b. the stock is overpriced   c. the stock is correctly priced
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...
(7-2) Constant Growth Valuation Boehm Incorporated is expected to pay a $1.50 per share dividend at...
(7-2) Constant Growth Valuation Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1=$1.50D1=$1.50). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rsrs, is 13%. What is the estimated value per share of Boehm’s stock? (7-4) Preferred Stock Valuation Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each...
(7-2) Constant Growth Valuation Boehm Incorporated is expected to pay a $1.50 per share dividend at...
(7-2) Constant Growth Valuation Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1=$1.50D1=$1.50). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rsrs, is 13%. What is the estimated value per share of Boehm’s stock? (7-4) Preferred Stock Valuation Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each...
The Dividend-Discount Model of stock valuation: A) Is an application of the net present value formula....
The Dividend-Discount Model of stock valuation: A) Is an application of the net present value formula. B) Takes the net present value of expected dividends and add it to the future sale price of the stock. C) Takes the net present value of the expected future price of the stock and add the annual dividend. D) Takes the annual dividend, adds it to the expected future selling price and divides by the number of years to get the current price.
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...
Calculate the following stock valuation problems: Company X is paying an annual dividend of $1.35 and...
Calculate the following stock valuation problems: Company X is paying an annual dividend of $1.35 and has decided to pay the same amount forever. How much should you pay for the stock, if you want to earn an annual rate of return of 9.5% on this investment? You want to purchase common stock of Company X and hold it for 7 years. The company just announced they will be paying an annual cash dividend of $6.00 per share for the...
Common Stock Valuation, Pt. I - Discussion #1 No unread replies.No replies. Dividend discount model -...
Common Stock Valuation, Pt. I - Discussion #1 No unread replies.No replies. Dividend discount model - ex. #1 (Note: This is similar to a former exam question.) a. Using the dividend discount model, what is the current market value of a stock (i.e., P0) that has a par value of $0.10 per share, a dividend growth rate of 5%, and an expected dividend of $ .80 per share at the end of the year, assuming your required rate of return...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT