46. IBIS Corporation has had dividends grow from $2.50 per share to $6.85 per share over the last 10 years (the $6.85 per share dividend was paid yesterday; that is, D0 = $6.85). This compounded annual growth rate in dividends is expected to continue into the future forever. If the current market price of IBIS’s stock is $54.00 per share, what rate of return do investors expect to receive from buying IBIS stock? (Record your answer rounded to 1 decimal place; for example, record 18.29654% as 18.3). 47. Jazper, Inc. just paid a dividend of $4.12 per share (that is, D0 = 4.12). If the growth rate in Jazper’s dividends is expected to shrink every year (forever) by 8 percent (that is, g = -8.0% = -.08) and if Jazper’s required rate of return on equity is 26.2%, what is the current equilibrium price of Jazper’s stock?
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Round
all dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percent
rounded to one decimal place
46. IBIS Corporation has had dividends grow from $2.50 per share to $6.85 per share over the last 10 years (the
$6.85 per share dividend was paid yesterday; that is, D0 = $6.85). This compounded annual growth rate in
dividends is expected to continue into the future forever. If the current market price of IBIS’s stock is $54.00
per share, what
rounded to 1 decimal place; for example, record 18.29654% as 18.3).
47. Jazper, Inc. just paid a dividend of $4.12 per share (that is, D0 = 4.12). If the growth rate in Jazper’s dividends
is expected to shrink every year (forever) by 8 percent (that is, g = -8.0% = -.08) and if Jazper’s required rate
of
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