Question

FinanceIsFun just paid a dividend of $1.60 on each share of its stock. The company expects that the dividends will increase at a constant rate of 6 percent per year in perpetuity. Investors require a 10 percent return on this company's stock. |

Calculate the current stock price. (Do not round
intermediate calculations and round your final answer to 2 decimal
places, e.g., 32.16.) |

Current price | $ |

Calculate the stock price in three years. (Do not round
intermediate calculations and round your final answer to 2 decimal
places, e.g., 32.16.) |

Stock price | $ |

Calculate the stock price in 12 years. (Do not round
intermediate calculations and round your final answer to 2 decimal
places, e.g., 32.16.) |

Stock price | $ |

Answer #1

a)

Current stock price = D1 / required rate - growth rate

Current stock price = (1.6 * 1.06) / 0.1 - 0.06

Current stock price = 1.696 / 0.04

**Current stock price = $42.40**

b)

Stock price in 3 years = Present value (1 + r)^{n}

Stock price in 3 years = 42.4 (1 + 0.06)^{3}

Stock price in 3 years = 42.4 * 1.191016

**Stock price in 3 years = $50.50**

c)

Stock price in 12 years = Present value (1 + r)^{n}

Stock price in 12 years = 42.4 (1 + 0.06)^{12}

Stock price in 12 years = 42.4 * 2.012196

**Stock price in 12 years = $85.32**

The Herjavec Co. just paid a dividend of $1.35 per share on its
stock. The dividends are expected to grow at a constant rate of 3
percent per year indefinitely. Investors require a return of 10
percent on the company's stock.
What is the current stock price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Current price
$
What will the stock price be in three years? (Do not round
intermediate calculations...

The Jackson–Timberlake Wardrobe Co. just paid a dividend of
$1.85 per share on its stock. The dividends are expected to grow at
a constant rate of 4 percent per year indefinitely. Investors
require a return of 12 percent on the company's stock.
What is the
current stock price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Current price
$
What will the
stock price be in three years? (Do not round intermediate...

The Jackson-Timberlake Wardrobe Co. just paid a dividend of
$1.20 per share on its stock. The dividends are expected to grow at
a constant rate of 4 percent per year indefinitely. Investors
require a return of 10 percent on the company's stock.
a. What is the current stock price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
b. What will the stock price be in 3 years? (Do not round
intermediate calculations and...

The Nearside Co. just paid a dividend of $1.55 per share on its
stock. The dividends are expected to grow at a constant rate of 6
percent per year, indefinitely. Investors require a return of 14
percent on the stock.
a.
What is the current price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
b.
What will the price be in three years? (Do not round
intermediate calculations and round your answer...

Co. just paid a dividend of $1.30 on each share of its stock.
The company expects that the dividends will increase at a constant
rate of 4 percent per year in perpetuity. Investors require a 14
percent return on this company's stock. Calculate the current stock
price. Calculate the stock price in three years. Calculate the
stock price in 12 years.

Bretton, Inc., just
paid a dividend of $3.00 on its stock. The growth rate in dividends
is expected to be a constant 4 percent per year, indefinitely.
Investors require a return of 11 percent on the stock for the first
three years, a rate of return of 9 percent for the next three
years, and then a return of 7 percent thereafter.
What is the
current share price for the stock? (Do not round
intermediate calculations and round your answer...

Company just issued a dividend of $1.60 per share on its stock.
The company is expected to have a constant 5 percent growth rate in
dividends. Use the constant growth model from chapter 7. Yes the
class material builds on itself. Required: If the stock sells for
$40 a share, what is the company’s cost of equity? (Do not round
intermediate calculations. Enter your answer as a percentage
rounded to 2 decimal places (e.g., 32.16).)

Sea Side, Inc., just paid a dividend of $2.32 per share on its
stock. The growth rate in dividends is expected to be a constant
5.9 percent per year indefinitely. Investors require a return of 22
percent on the stock for the first three years, then a return of 17
percent for the next three years, and then a return of 15 percent
thereafter. What is the current share price? (Do not round
intermediate calculations. Round your answer to 2...

Sea Side, Inc., just
paid a dividend of $2.24 per share on its stock. The growth rate in
dividends is expected to be a constant 6.3 percent per year
indefinitely. Investors require a return of 20 percent on the stock
for the first three years, then a return of 15 percent for the next
three years, and then a return of 13 percent thereafter. What is
the current share price? (Do not round intermediate
calculations. Round your answer to 2...

Sea Side, Inc., just paid a dividend of $2.24 per share on its
stock. The growth rate in dividends is expected to be a constant
6.3 percent per year indefinitely. Investors require a return of 20
percent on the stock for the first three years, then a return of 15
percent for the next three years, and then a return of 13 percent
thereafter. What is the current share price? (Do not round
intermediate calculations. Round your answer to 2...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 10 minutes ago

asked 16 minutes ago

asked 22 minutes ago

asked 22 minutes ago

asked 27 minutes ago

asked 40 minutes ago

asked 43 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago