Question

It is now January 1, 2004. A multinational corporation has just developed a solar panel capable...

It is now January 1, 2004. A multinational corporation has just developed a solar panel capable of generating more electricity than any solar panel currently on the market. As a result, the corporation is expected to experience a 15% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and the growth rate will slow to 5% per year indefinitely. Stockholders require a return of 12% on this stock. The most recent annual dividend, which was paid yesterday, was $1.75/share. Calculate the value of the stock today, & the expected return in 2004 and 2009

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

D0 = 1.75

D1 = 1.75 (1+ 0.15) = 2.0125

D2 = 2.0125 (1+ 0.15) = 2.314375

D3 = 2.314375 (1+ 0.15) = 2.66153125

D4 = 2.66153125 (1+ 0.15) = 3.0607609375

D5 = 3.0607609375 (1+ 0.15) = 3.51987507812

Value of Stock today =

=

= $ 39.44

Value of Stock 2009 =

=

= $ 52.80

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

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
Gustav Technologies (GT) has just developed a solar panel capable of generating 200% more electricity than...
Gustav Technologies (GT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, GT is expected to experience a 15% annual growth rate for the next 3 years and a 10% growth for 2 years after that. By the end of 5 years, other firms will have developed comparable technology, and GT's will remain constant indefinitely. Stockholders require a return of 15% on GT's stock. The most...
Rocking technologies RT has just developed a sokar panel capable of generating 200% more electricity than...
Rocking technologies RT has just developed a sokar panel capable of generating 200% more electricity than amy solar panel currently on the market. As a result, RT is exoected to experience a 15% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology and RT’s growth rate will slow to 5% per year indefinitely. Stockholders require a return of 6% on the stock. The most recent dividend was paid...
Google has just developed a solar panel capable of generating 200% more electricity than any solar...
Google has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, Google is expected to experience a 15% annual growth rate for the next 3 years and a 10% growth for 2 years after that. By the end of 5 years, other firms will have developed comparable technology, and Google's will remain constant. Stockholders require a return of 15% on Google's stock. The most recent annual dividend,...
Problem 2 Gustav Technologies (GT) has just developed a solar panel capable of generating 200% more...
Problem 2 Gustav Technologies (GT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, GT is expected to experience a 15% annual growth rate for the next 3 years and a 10% growth for 2 years after that. By the end of 5 years, other firms will have developed comparable technology, and GT's will remain constant indefinitely. Stockholders require a return of 15% on GT's stock....
Problem 7-20 Nonconstant Growth Stock Valuation Reizenstein Technologies (RT) has just developed a solar panel capable...
Problem 7-20 Nonconstant Growth Stock Valuation Reizenstein Technologies (RT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, RT is expected to experience a 15% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and RT's growth rate will slow to 8% per year indefinitely. Stockholders require a return of 11% on RT's stock....
The Blinkelman Corporation has just announced that it plans to introduce a new solar panel that...
The Blinkelman Corporation has just announced that it plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, analysts now expect the company’s earnings, currently (year 0) $1.00 per share to grow by 50 percent per year for the next three years, by 25 percent per year for the following 3 years, and by 9 percent per year thereafter. Blinkelman does not currently pay a dividend, but it expects to pay...
The Blinkelman Corporation has just announced that it plans to introduce a new solar panel that...
The Blinkelman Corporation has just announced that it plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, analysts now expect the company’s earnings, currently (year 0) $1.10 per share to grow by 50 percent per year for the next three years, by 25 percent per year for the following 3 years, and by 7 percent per year thereafter. Blinkelman does not currently pay a dividend, but it expects to pay...
VIP Corporation has just paid a dividend of $1.50. Dividends are expected to grow at 20%...
VIP Corporation has just paid a dividend of $1.50. Dividends are expected to grow at 20% for the first three years, 10% for the following two years. What is the expected growth rate for the subsequent years if the stock is selling for $24.86 today and the required return is 17 percent? A. –1.07% B. –1.75% C. 8.00% D. 8.65%
1. Stock Values Courageous, Inc. just paid a dividend of $1.80per share on its stock. The...
1. Stock Values Courageous, Inc. just paid a dividend of $1.80per share on its stock. The dividends are expected to grow at a constant rate of 3 percent per year, indefinitely. If investors require a 12 percent return on Courageous stock, what is the current price? What will the price be in 3 years? In 15 years? PART A: Current Price: $____________. PART B: Price in Three Years: $____________. PART C: Price in Fifteen Years: $____________. #4 Stock Values The...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.00. It expects to...
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.00. It expects to grow at a constant rate of 3% per year. If investors require a 10% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $   per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT