2. Google will pay its dividends of $5 in 2020 and $6 in 2021. It plans to pay a constantdividend of S7 from 2022 permanently.D Given the required return ofr 20 percent, what is the stock price of Year 2021? (Youdon't have to calculate the dividend growth rate. Please use the current dividendinformation)2) Given the required return of 20 percent, figure out the stock price of Year 2020, basedon both the stock price and dividend of Year 2021. (If you cannot figure out thestock price of Year 2021, please use $30.) (3) Given the required return of 20 percent, what is the current stock price in 2019 (SPo)based on both the stock price of Year 2021 and dividends of Year 2020 and 2021?

The dividend discount model (DDM) is a quantitative method used for predicting the price of a…

Answered: 2. Google will pay its dividends of $5…

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

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Suppose in 2023 the expected dividends of Fordson, Inc. stock will equal $260M with a discount rate of 8% and an expected growth rate for the dividends of 6%. Assuming constant growth rate, if interest increases to 9%, will the val of the company increase or decrease and by how much?
Suppose in 2023 the expected dividends of Fordson, Inc. stock will equal $260M with a discount rate of 8% and an expected growth rate for the dividends of 6%. Assuming constant growth rate, if interest increases to 9%, will the val of the company increase or decrease and by how much?
As a financial analyst working for CSFB your job is to evaluate the equity value of the WIFI Inc. Your research identified the following information about that firm: it would pay an annual dividend of $1.20 per share next year (in 2022) and the required rate of return on capital is 20%. (a) Suppose that dividends are expected to stay constant forever. What is the maximum amount you would pay today (in 2021) for WIFI Inc? For parts b, c and d assume that dividends grow at a constant 3% rate a year forever. (b) What is the maximum amount you would pay today (in 2021) for WIFI Inc’s share of stock? (c) What is the capital gains yield for WIFI Inc.? (d) What is the dividend yield for WIFI Inc.? For part (e) assume that the dividends will be as follows $1.20 in 2022, $1.40 in 2023 and $1.60 in 2024. After that, dividends are projected to increase at a constant rate of 2% per year forever. (e) How much are you willing to pay today (in 2021) to buy one share of this stock?
Consider company ABC. Today it is the 1st of January 2022. The expected earnings of ABC (in million £) for the next few years (as per the 1st of January) are forecast to be: Year 2023 2024 2025 2026 2027 Expected Earnings 1 1.5 0.9 1.2 1.3 From year 2027 and onwards the earnings of ABC are expected to grow with a growth rate of 5%. The required rate of return of ABC is 12%. The dividend policy of ABC is currently such that they pay out 80% of their earnings as dividends, i.e. their earnings retention ratio b is constant and equals 0.2. The forecast of the growth rate is based on an earnings retention ratio of 0.2. Suppose that you forecast Return on new Investment (RI) to be 10%. What is the optimal dividend policy? Explain.
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Dear Bartleby, I need help calculating the dividend yield e. If Wiper's stock had a price/earnings ratio of 14 at the end of 2020, what was the market price of the stock? (Round intermediate calculations and final answer to 2 decimal places.)f. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part e. (Round intermediate calculations and final answers to 2 decimal places. Presented here are summarized data from the balance sheets and income statements of Wiper Inc.: WIPER INC. Condensed Balance Sheets December 31, 2020, 2019, 2018 (in millions) 2020 2019 2018 Current assets $ 650 $ 900 $ 700 Other assets 2,750 2,050 1,750 Total assets $ 3,400 $ 2,950 $ 2,450 Current liabilities $ 500 $ 800 $ 700 Long-term liabilities 1,500 1,000 800 Stockholders' equity 1,400 1,150 950 Total liabilities and stockholders' equity $ 3,400 $ 2,950 $ 2,450…
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Consider company ABC. Today it is 1st of January 2023 and ABC has just paid a dividend of £3 million. The expected earnings of ABC for the next 30 years are forecast to grow at a rate of 15% per annum. From 1st of January 2053 and onwards the earnings of ABC are expected to grow at a rate of 5%. The required rate of return of ABC is 12% per annum. The current dividend policy of ABC is such that they pay out 50% of its earnings as dividends (assume that they pay their dividends on 1st of January every year). Suppose that the dividend payout ratio is expected to stay constant in the future. What is the value of ABC stock? Show and explain your calculations and any assumptions you make. 2) Just after the dividend payment on 1st of January 2043, ABC is planning to reduce their dividends and only pay out 40% of its earnings. What is the value of ABC under the new dividend policy?
2. Calculate the value of a stock with an expected annual dividend of $2.00 next year and an estimated annual dividend growth of 2% per year indefinitely. Assume a discount rate of 8%. Solve the problem two different ways: first by using the algebraic formula for the Gordon Growth Model, then by using Excel to calculate and sum the dividends and their respective present values for the next 150 years. hint: Use the PV ConstGrowth Dividend example in the posted DDM Excel Examples file as a guide. Feel free to copy the worksheet and make the minor necessary changes to answer this question.
Dietterich Electronics wants its shareholders to earn a return of 15% on their investment in the company. At what price would the stock need to be priced today if Dietterich Electronics had a a. $0.20 constant annual dividend forever? b. $0.90 constant annual dividend forever? c. $1.80 constant annual dividend forever? d. $2.80 constant annual dividend forever?
answer each component PLEASE.

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