Question

Murray Telecom paid a $5.00 per share stock dividend last year (D0). These dividends are expected to grow at a rate of 8 percent per year for the next 4 years, 5 percent per year for the subsequent 2 years, and then level off into perpetuity at a growth rate of 2 percent per year. What should be the value of the firm’s stock if the required rate of return on similar securities is 12 percent? Please show calculations!

Answer #1

Year | Dividend | PVF 12% | dividend *PVF |

1 | 5(1+.08)=5.4 | .89286 | 4.8214 |

2 | 5.4(1+.08)= 5.832 | .79719 | 4.6492 |

3 | 5.832(1+.08)= 6.2986 | .71178 | 4.4832 |

4 | 6.2986(1+.08)= 6.8024 | .63552 | 4.3231 |

5 | 6.8024(1+.05)= 7.1426 | .56743 | 4.0529 |

6 | 7.1426(1+.05)= 7.4997 | .50663 | 3.7996 |

6 terminal value | 76.4969 | .50663 | 38.7556 |

value of the firm’s stock |
64.89 |
||

Terminal value at year6 =D6(1+g)/(Rs-g)

= 7.4997(1+.02)/(.12-.02)

= 7.4997*1.02/.10

= 76.4969

**FIND PRESENT VALUE FACTOR FROM TABLE AT 12% OR USING THE FORMULA ==1/(1+I)^N Where n =1,2,3,4,5,6

Murray Telecom paid a $5.00 per share stock dividend last year
(D0). These dividends are expected to grow at a rate of 8 percent
per year for the next 4 years, 5 percent per year for the
subsequent 2 years, and then level off into perpetuity at a growth
rate of 2 percent per year. What should be the value of the firm’s
stock if the required rate of return on similar securities is 12
percent? Please show calculations!

Murray Telecom just paid a $3.50 per share stock dividend
(D0). Dividends are expected to grow at a rate of 8
percent per year for the next 6 years, 4 percent per year for the
subsequent 4 years, and then level off into perpetuity at a growth
rate of 2 percent per year. Using the dividend growth model, what
should be the value of the firm’s common stock if the required rate
of return on similar securities is 11.25 percent?

Could I Industries just paid a dividend of $1.15 per share. The
dividends are expected to grow at a rate of 18 percent for the next
six years and then level off to a growth rate of 7 percent
indefinitely. If the required return is 15 percent, what is the
value of the stock today? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)

Could I Industries just paid a dividend of $1.97 per share. The
dividends are expected to grow at a rate of 18 percent for the next
three years and then level off to a growth rate of 7 percent
indefinitely. If the required return is 13 percent, what is the
value of the stock today? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)

Could I Industries just paid a dividend of $1.34 per share. The
dividends are expected to grow at a rate of 19.3 percent for the
next five years and then level off to a growth rate of 6 percent
indefinitely. If the required return is 10 percent, what is the
value of the stock today?
(Do not round intermediate calculations. Round your answer to 2
decimal places.)

Upper Gullies Corp. just paid a dividend of $2.70 per share. The
dividends are expected to grow at 19 percent for the next eight
years and then level off to a 7 percent growth rate indefinitely.
If the required return is 14 percent, what is the price of the
stock today? (Do not round intermediate calculations. Round
the final answer to 2 decimal places.)
Stock price
$

Could I Industries just paid a dividend of $1.30 per share. The
dividends are expected to grow at a rate of 15 percent for the next
five years and then level off to a growth rate of 6 percent
indefinitely. If the required return is 12 percent, what is the
value of the stock today? (Do not round intermediate calculations.
Round your answer to 2 decimal places.) Price:

ZZZ Industries just paid a dividend of $1.35 per share. The
dividends are expected to grow at a 27 percent rate for the next 5
years and then level off to a 3 percent growth rate indefinitely.
If the required return is 8.51 percent, what is the value (in $) of
the stock today? Answer to two decimals, carry
intermediate calculations to four decimals.
****show step****

Could I Industries just paid a dividend of $1.82 per share. The
dividends are expected to grow at a 16 percent rate for the next 4
years and then level off to a 4 percent growth rate indefinitely.
If the required return is 15 percent, what is the value of the
stock today? (Do not round intermediate calculations. Round your
answer to 2 decimal places. Omit the "$" sign in your
response.)
Price $______

A7X Corp. just
paid a dividend of $1.50 per share. The dividends are expected to
grow at 40 percent for the next 10 years and then level off to a
growth rate of 6 percent indefinitely.
If the required
return is 15 percent, what is the price of the stock today?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 28 minutes ago

asked 34 minutes ago

asked 47 minutes ago

asked 51 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 2 hours ago