Question

Carnes Cosmetics Co.'s stock price is $63.39, and it recently paid a $2.50 dividend. This dividend is expected to grow by 20% for the next 3 years, then grow forever at a constant rate, g; and rs = 13%. At what constant rate is the stock expected to grow after Year 3? Round your answer to two decimal places. Please do not round until the end! If a calculator is used, please tell me the process.

Answer #1

D1=(2.5*1.2)=3

D2=(3*1.2)=3.6

D3=(3.6*1.2)=4.32

Value after year 3=(D3*Growth Rate)/(Required rate-Growth rate)

=(4.32*(1+Growth rate)/(0.13-Growth rate)

Current price=Future dividends*Present value of discounting factor(rate%,time period)

63.39=3/1.13+3.6/1.13^2+4.32/1.13^3+(4.32*(1+Growth rate)/(0.13-Growth rate)/1.13^3

63.39=8.468172018+2.993976701(1+Growth rate)/(0.13-Growth rate)

(63.39-8.468172018)/2.993976701=(1+Growth rate)/(0.13-Growth rate)

(1+Growth rate)/(0.13-Growth rate)=18.34410667

1+Growth rate=18.34410667*(0.13-Growth rate)

1+Growth rate=2.384733868-18.34410667 Growth rate

Growth rate=(2.384733868-1)/(1+18.34410667)

=**7.16%(Approx).**

Carnes Cosmetics Co.'s stock price is $51, and it recently paid
a $2.50 dividend. This dividend is expected to grow by 17% for the
next 3 years, then grow forever at a constant rate, g; and rs= 12%.
At what constant rate is the stock price expected to grow after
year 3? Do not round intermediate calculations. Round your answer
to two decimal places.
________%?

Carnes Cosmetics Co.'s stock price is $54, and it recently paid
a $2.50 dividend. This dividend is expected to grow by 15% for the
next 3 years, then grow forever at a constant rate, g; and
rs = 12%. At what constant rate is the stock expected to
grow after Year 3? Do not round intermediate calculations. Round
your answer to two decimal places.

Carnes Cosmetics Co.'s stock price is $74.30, and it recently
paid a $2.25 dividend. This dividend is expected to grow by 28% for
the next 3 years, then grow forever at a constant rate, g; and rs =
13%. At what constant rate is the stock expected to grow after Year
3? Round your answer to two decimal places. Do not round your
intermediate calculations.

Carnes Cosmetics Co.'s stock price is $74.30, and it recently
paid a $2.25 dividend. This dividend is expected to grow by 28% for
the next 3 years, then grow forever at a constant rate, g; and rs =
13%. At what constant rate is the stock expected to grow after Year
3? Round your answer to two decimal places. Do not round your
intermediate calculations.

Carnes Cosmetics Co.'s stock price is $38, and it recently paid
a $1.25 dividend. This dividend is expected to grow by 22% for the
next 3 years, then grow forever at a constant rate, g; and
rs = 13%. At what constant rate is the stock expected to
grow after Year 3? Do not round intermediate calculations. Round
your answer to two decimal places.
%

Carnes Cosmetics Co.'s stock price is $40.18, and it recently
paid a $1.75 dividend. This dividend is expected to grow by 22% for
the next 3 years, then grow forever at a constant rate, g; and rs =
13%. At what constant rate is the stock expected to grow after Year
3? Round your answer to two decimal places. Do not round your
intermediate calculations.

Carnes Cosmetics Co.'s stock price is $43, and it recently paid
a $1.75 dividend. This dividend is expected to grow by 17% for the
next 3 years, then grow forever at a constant rate, g; and
rs = 11%. At what constant rate is the stock expected to
grow after Year 3? Do not round intermediate calculations.

Carnes Cosmetics Co.'s stock price is $52, and it recently paid
a $1.50 dividend. This dividend is expected to grow by 29% for the
next 3 years, then grow forever at a constant rate, g; and rs =
12%. At what constant rate is the stock expected to grow after Year
3?

Carnes Cosmetics Co.'s stock price is $54, and it recently paid
a $1.75 dividend. This dividend is expected to grow by 25% for the
next 3 years, then grow forever at a constant rate, g; and rs =
16%. At what constant rate is the stock expected to grow after Year
3? Do not round intermediate calculations. Round your answer to two
decimal places.

Carnes Cosmetics Co.'s stock price is $58, and it recently paid
a $1.50 dividend. This dividend is expected to grow by 23% for the
next 3 years, then grow forever at a constant rate, g; and
rs = 10%. At what constant rate is the stock expected to
grow after Year 3? Do not round intermediate calculations. Round
your answer to two decimal places.
_______%

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 4 minutes ago

asked 30 minutes ago

asked 31 minutes ago

asked 32 minutes ago

asked 43 minutes ago

asked 50 minutes ago

asked 57 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago