Question

Library Co. just paid a dividend of $2.75 per share. The analysts’ consensus is that its...

Library Co. just paid a dividend of $2.75 per share. The analysts’ consensus is that its dividends will be increased by 4% next year. Dividends are expected to grow at the rate of 3% per year, forever, after that. For this problem, assume a market capitalization rate (k) of 10%.

- Calculate Library’s dividends per share in years 1, 2 and 3.

- Calculate the intrinsic value of a share of Library Co. today.

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
A company just paid a dividend of $1.30 per share. The consensus forecast of financial analysts...
A company just paid a dividend of $1.30 per share. The consensus forecast of financial analysts is a dividend of $1.70 per share next year and $2.30 per share two years from now. Thereafter, you expect the dividend to grow 4% per year indefinitely into the future. If the required rate of return is 11% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)
The In-Tech Co. just paid a dividend of $1 per share. Analysts expect its dividend to...
The In-Tech Co. just paid a dividend of $1 per share. Analysts expect its dividend to grow at 25% per year for the next three years and then at a constant growth rate per year thereafter. The estimate of the constant growth rate of dividends is based on the long term return of equity 25% and payout ratio 80%. If the required rate of return on the stock is 18%, what is the current value of the stock? Clearly show...
D Co. has just paid a dividend of 2.50 Baht per share on its stock. The...
D Co. has just paid a dividend of 2.50 Baht per share on its stock. The dividends are expected to grow at a constant rate of 5 percent forever. The stock currently sells for 20 Baht per share. What are the dividend yield and the expected capital gains yield?
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.03 per share on its stock. The...
The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.03 per share on its stock. The dividends are expected to grow at a constant rate of 2.75 percent per year indefinitely. Investors require a return of 6.74 percent on the company's stock. What will the stock price be in 10 years?
The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect...
The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect that the growth rate for the dividend will be 40% in year 1, 30% in year 2, 20% in year 3, 15% in year 4, and 10% in year five. After the fifth year, the dividend will grow at a constant rate of 6%. If the required return for Birdstrom is 12%, calculate the current stock price and the expected dividend yield and capital...
Stella Corporation just paid a $3.00 dividend this morning. Analysts believe that the company's dividends will...
Stella Corporation just paid a $3.00 dividend this morning. Analysts believe that the company's dividends will grow 30% per year for each of the next 2 years. after the second year, analysts believe that dividends will grow constantly into the foreseeable future at 4% per year. if analysts believe that Stella Corporation stock should earn a required return of 12% per year, what is the intrinsic value of a share its stock today?
a. ABC Company has just paid a dividend of $1.00 per share. Dividends are paid annually....
a. ABC Company has just paid a dividend of $1.00 per share. Dividends are paid annually. Analysts estimate that dividends per share will grow at a rate of 20% for the next 2 years, at 15% for the subsequent 3 years, and at 3% thereafter. If the shareholders’ required rate of return is 12% per year, then what is the price of the stock today? What will be the ex-dividend price at the end of the first year? What will...
1. Sky High Co. just paid a dividend of $2.0 per share on its stock. The...
1. Sky High Co. just paid a dividend of $2.0 per share on its stock. The dividends are expected to grow at a constant rate of 2 percent per year indefinitely. If investors require an 8.6 percent return on Sky High Co. stock, the current price is $ _________ . Round it to two decimal places 2. Sky High Co. just paid a dividend of $4.6 per share on its stock (D0). The dividends are expected to grow at a...
Colgate Palmolive company just paid $1.12 per share in dividends yesterday. Due to high profits, analysts...
Colgate Palmolive company just paid $1.12 per share in dividends yesterday. Due to high profits, analysts are expecting 10% per year next year and 14% per year in the following 2 years. After which dividends are expected to increase by 3.7% per year, forever. The required return on stock is 12.5%, compounded weekly and dividend are paid annually. What is the intrinsic value of this stock?
Storico Co. just paid a dividend of $2.45 per share. The company will increase its dividend...
Storico Co. just paid a dividend of $2.45 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on Storico stock is 11 percent, what will a share of stock sell for today?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT