Question

Melissa Cutt is thinking about buying some shares of EZLawn​ Equipment, at $ 46.26 per share....

Melissa Cutt is thinking about buying some shares of EZLawn​ Equipment, at $ 46.26 per share. She expects the price of the stock to rise to $ 48.34 over the next 3 years. During that time she also expects to receive annual dividends of $ 5.59 per share.

a. What is the intrinsic worth of this​ stock, given a required rate of return of 11%​?

b. What is its expected​ return?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
George Robbins considers himself an aggressive investor.​ He's thinking about investing in some foreign securities and...
George Robbins considers himself an aggressive investor.​ He's thinking about investing in some foreign securities and is looking at stocks in​ (1) Bayer​ AG, the big German chemical and​ health-care firm, and​ (2) Swisscom​ AG, the Swiss telecommunications company.                                                Bayer​ AG, which trades on the Frankfurt​ Exchange, is currently priced at 51.99 euros ​(€​) per share. It pays annual dividends of 1.41 euro per share. Robbins expects the stock to climb to 61.04 euro per share over the next 12...
you're thinking of buying a stock priced at $98 per share. Assume that the risk-free rate...
you're thinking of buying a stock priced at $98 per share. Assume that the risk-free rate is about 4.4% and the market risk premium is 6.1%. If you think the stock will rise to $115 per share by the end of the year, at which time it will pay a $2.97 dividend, what beta would it need to have for this expectation to be consistent with the CAPM?
A. The James Clothing Co. pays a constant annual dividend of $4.00 per share. What is...
A. The James Clothing Co. pays a constant annual dividend of $4.00 per share. What is one share of this stock worth to you today if you require a 27 percent rate of return? B. LB Moore has 33,000 shares of common stock outstanding. The firm just paid an annual dividend of $2.00 per share on this stock. The market rate of return is 16.00 percent. What will one share of this stock be worth one year from now if...
Your are interested in buying some stock in a company that is expected to pay a...
Your are interested in buying some stock in a company that is expected to pay a dividend annually of $3.00 per share next year, $3,30 for the following year and $2.50 per share for the third year. Thereafter, dividends are expected to grow 5% annually. Assume the first dividend will be payed one year from today. You want a return of 14% per year. Would you buy this stock if it was selling for $30.00 per share today? Why? Show...
1. McCormick & Company is considering buying a new factory in Largo, Maryland. The company is...
1. McCormick & Company is considering buying a new factory in Largo, Maryland. The company is considering issuing additional common stock to finance the purchase of the factory. McCormick & Company stock has recently paid a dividend payment of $0.52 per share. Dividends are expected to grow by 8.5 percent per year for the next five years. The required return on the stock is 12 percent. Determine the intrinsic value of the stock, also known as today's stock price.
13) The next dividend payment by HM Enterprises will be $1.82 per share with future increases...
13) The next dividend payment by HM Enterprises will be $1.82 per share with future increases of 2.8 percent annually. The stock currently sells for $38.70 per share. What is the dividend yield? 14) Unilever will pay an annual dividend of $3.26 a share next year with future dividends increasing by 2.8 percent annually. What is the market rate of return if the stock is currently selling for $49.10 a share?   Would you buy this stock if your current portfolio...
Question 5. It is January 1st, 2019 and you are thinking about buying some Warm Inc....
Question 5. It is January 1st, 2019 and you are thinking about buying some Warm Inc. stocks. Last year’s earnings per share (EPS) was $3 and the company did not pay any dividend. Earnings are expected to grow at 14% for the next six years (2019 to 2024). The company will pay its first dividend in December 2024, and the dividend will be 50% of its earnings that year. The dividend afterward is expected to grow at a constant rate...
On April 29, 2020, Patricia purchased 2,000 shares in an aggressive growth company called WootWoot! Inc....
On April 29, 2020, Patricia purchased 2,000 shares in an aggressive growth company called WootWoot! Inc. for $19.40/share. Patricia believes the stock price will increase to $29/share in one year; she also expects to receive dividends of $5,000 over this period on these shares. If Patricia is correct, what would be her return? 58.70% 58.92% 62.37% 66.70% 59.83%
Laurel Enterprises expects earnings next year of $4 per share. The company will pay out all...
Laurel Enterprises expects earnings next year of $4 per share. The company will pay out all of its earnings to investors. Its expected return on new investment (i.e., ROE) is 12%. The required rate of return is 10%. What is the intrinsic value of the stock today? Laurel Enterprises expects earnings next year of $4 per share. The company will retain $2.4 of its earnings to reinvest in new projects that have an expected return of 12% per year (i.e.,...
You own, 1000 shares of stock in Avondale Corporation. You will receive a $1.95 per share...
You own, 1000 shares of stock in Avondale Corporation. You will receive a $1.95 per share dividend in one year. In two years, the company will pay a liquidating dividend of $65 per share. The required return on the stock is 15 percent. What is the current share price of your stock(ignoring taxes)? if you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends. (hint: Dividends will...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT