12. Problem 9.12 (Valuation of a Constant Growth Stock) L eBook Problem Walk-Through Investors require a 7% rate of return on Mather Company's stock (i.e., r. - 7%). a. What is its value if the previous dividend was De $3.50 and investors expect dividends to grow at a constant annual rate of (1) -4%, (2) 0%, (3) 2%, or (4) 6 % 7 Do not round intermediate calculations. Round your answers to the nearest cent. (1) $ (2) $ (3) $ b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12 %? Round your answers to the nearest cent. If the value is undefined, enter N/A. (1) $ (2) $ 4 12. Problem 9.12 (Valuation of a Constant Growth Stock) L eBook Problem Walk-Through Investors require a 7% rate of return on Mather Company's stock (i.e., r. - 7%). a. What is its value if the previous dividend was De $3.50 and investors expect dividends to grow at a constant annual rate of (1) -4%, (2) 0%, (3) 2%, or (4) 6 % 7 Do not round intermediate calculations. Round your answers to the nearest cent. (1) $ (2) $ (3) $ b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12 %? Round your answers to the nearest cent. If the value is undefined, enter N/A. (1) $ (2) $ 4
12. Problem 9.12 (Valuation of a Constant Growth Stock) L eBook Problem Walk-Through Investors require a 7% rate of return on Mather Company's stock (i.e., r. - 7%). a. What is its value if the previous dividend was De $3.50 and investors expect dividends to grow at a constant annual rate of (1) -4%, (2) 0%, (3) 2%, or (4) 6 % 7 Do not round intermediate calculations. Round your answers to the nearest cent. (1) $ (2) $ (3) $ b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12 %? Round your answers to the nearest cent. If the value is undefined, enter N/A. (1) $ (2) $ 4 12. Problem 9.12 (Valuation of a Constant Growth Stock) L eBook Problem Walk-Through Investors require a 7% rate of return on Mather Company's stock (i.e., r. - 7%). a. What is its value if the previous dividend was De $3.50 and investors expect dividends to grow at a constant annual rate of (1) -4%, (2) 0%, (3) 2%, or (4) 6 % 7 Do not round intermediate calculations. Round your answers to the nearest cent. (1) $ (2) $ (3) $ b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12 %? Round your answers to the nearest cent. If the value is undefined, enter N/A. (1) $ (2) $ 4
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:12. Problem 9.12 (Valuation of a Constant Growth Stock)
L
eBook
Problem Walk-Through
Investors require a 7% rate of return on Mather Company's stock (i.e., r. - 7%).
a. What is its value if the previous dividend was De $3.50 and investors expect dividends to grow at a constant annual rate of (1) -4%, (2) 0%, (3) 2%, or
(4) 6 % 7 Do not round intermediate calculations. Round your answers to the nearest cent.
(1) $
(2) $
(3) $
b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was
(1) 8% or (2) 12 %? Round your answers to the nearest cent. If the value is undefined, enter N/A.
(1) $
(2) $
4
Transcribed Image Text:12. Problem 9.12 (Valuation of a Constant Growth Stock)
L
eBook
Problem Walk-Through
Investors require a 7% rate of return on Mather Company's stock (i.e., r. - 7%).
a. What is its value if the previous dividend was De $3.50 and investors expect dividends to grow at a constant annual rate of (1) -4%, (2) 0%, (3) 2%, or
(4) 6 % 7 Do not round intermediate calculations. Round your answers to the nearest cent.
(1) $
(2) $
(3) $
b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was
(1) 8% or (2) 12 %? Round your answers to the nearest cent. If the value is undefined, enter N/A.
(1) $
(2) $
4
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