Hubbard Industries just paid a common dividend, D0, of $1.20. It expects to grow at a constant rate of 2% per year. If investors require a 12% return on equity, what is the current price of Hubbard's common stock?
Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.30 at the end of each year. If investors require an 6% return on the preferred stock, what is the price of the firm's perpetual preferred stock?
Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.30 per share at the end of 2013. The dividend is expected to grow at 18% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2013)?
Hubbard stock value = Dividend next period/(required return -
Preferred value = Cash flow/required return
|1||$ 1.534||$ 1.534||0.917431||$ 1.407|
|2||$ 1.810||$ 1.810||0.84168||$ 1.524|
|3||$ 2.136||$ 75.470||$ 77.606||0.772183||$ 59.926|
|4||$ 2.264||$ 2.264|
|Share price0||$ 62.86|
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