Question

Oriole Corp. is expected to grow rapidly at a rate of 35 percent for the next...

Oriole Corp. is expected to grow rapidly at a rate of 35 percent for the next seven years. The company's first dividend, to be paid three years from now, will be $5. After seven years, the company (and the dividends it pays) will grow at a rate of 6.1 percent. What is the value of Oriole stock with a required rate of return of 14 percent? (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer = $ 113.59

Note:

Price = Present value of price at Year 7 + Present value of Dividends

= 89.22+24.37

= $ 113.59

Present value of price at Year 7 = [ (16.60*1.061)/(14%-6.1%)] * 0.40

= $ 89.22

Present Value of Dividends:

Year Dividend Discounting Factor(14%) Present Value
1 -    -    -   
2 -    -    -   
3 5.00 0.67 3.35
4 6.75 0.59 3.98
5 9.11 0.52 4.74
6 12.30 0.46 5.66
7 16.61 0.40 6.64
Present Value of Dividends 24.37
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
Crane Corp. is expected to grow rapidly at a rate of 35 percent for the next...
Crane Corp. is expected to grow rapidly at a rate of 35 percent for the next seven years. The company's first dividend, to be paid three years from now, will be $5. After seven years, the company (and the dividends it pays) will grow at a rate of 8.1 percent. What is the value of Crane stock with a required rate of return of 14 percent?
is expected to grow rapidly at a rate of 35 percent for the next seven years....
is expected to grow rapidly at a rate of 35 percent for the next seven years. The company's first dividend, to be paid three years from now, will be $5. After seven years, the company (and the dividends it pays) will grow at a rate of 9.50 percent. What is the value of Diaz stock with a required rate of return of 14 percent? Value of stock in $
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent...
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. The required return is 13 percent and the company just paid a dividend of $2.60. What are the dividends each year for the next four years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) What is the share price in...
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent...
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 6.5 percent thereafter. The required return is 13 percent and the company just paid a dividend of $3.00. What are the dividends each year for the next four years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) What is the share price in...
Carla Vista, Inc., is a fast-growth company that is expected to grow at a rate of...
Carla Vista, Inc., is a fast-growth company that is expected to grow at a rate of 23 percent (per year) for the next four years. It is then expected to grow at a constant rate of 6 percent. Carla Vista’s first dividend, of $3.60, will be paid in year 3. If the required rate of return is 20 percent, what is the current value of the stock if dividends are expected to grow at the same rate as the company?...
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent...
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling off to a constant 4.5 percent thereafter. If the required return is 10.5 percent and the company just paid a dividend of $2.58, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 28 percent...
Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 28 percent for the next three years, with the growth rate falling off to a constant 6.9 percent thereafter. If the required return is 16 percent and the company just paid a dividend of $3.20, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share Price=
Burton Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent...
Burton Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 6.5 percent thereafter. The required return is 13 percent and the company just paid a dividend of $3.00.    What are the dividends each year for the next four years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Year 1 $ Year 2...
Melanie Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent...
Melanie Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 14.9 percent and the company just paid a dividend of $2.39, what is the current share price? ( Do not round intermediate calculations, round your answer to two decimal points, i.e. 32.16)
Wildhorse Corp. is a fast-growing company whose management expects it to grow at a rate of...
Wildhorse Corp. is a fast-growing company whose management expects it to grow at a rate of 30 percent over the next two years and then to slow to a growth rate of 13 percent for the following three years. If the last dividend paid by the company was $2.15. It then aasks for D1 through D5. Then asks for Compute the present value of these dividends if the required rate of return is 14 percent. (Round intermediate calculations and final...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT