5. ABC Inc. paid dividends of $13 per share to its shareholders last year. Assume that the value of the company has a discount rate of 17% and that dividends are growing at 4% per y Calculate the current price of the stock.
Q: A company has stock which costs $42.00 per share and pays a dividend of $2.30 per share this year.…
A: Given information: Price of the stock is $42.00 Dividend paid is $2.30 Cost of equity is 11%
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A: Required return = (D1/ Current market price)+Growth rate D1 = Dividend per share Dividend per share…
Q: Dee's made two announcements concerning its common stock today. First, the company announced that…
A: Under Dividend Growth Model, Value of stock = Dividend Discount rate - Growth rate
Q: The common stock of United Maintenance sells for $71.88 a share. The stock is expected to pay $3.42…
A: Given, Current Price = $71.88 Expected Dividend = $3.42 per share Growth rate = 2.475% To Find,…
Q: Shares of Hot Donuts common stock are currently selling for $32.35. The last annual dividend paid…
A: Accroding to Gordon's growth model,Po =wherePo= current market priceDo =dividend paidg= growth…
Q: Reiterpallasch Inc. has provided you the following data: the company expects to pay a dividend of…
A: WACC(Weighted Avg. Cost of Capital) is average of cost involved in financing whole capital…
Q: Wayne, Inc.'s outstanding common stock is currently selling in the market for $54. Dividends of…
A: Here, Market Price of Share is $54 Last Dividend Per Share is $3.16 Return on Equity is 35%…
Q: Ecolap Incorporated (ECL) recently paid a $0.36 dividend. The dividend is expected to grow at a…
A: Recent Dividend (D0) = $0.36Constant growth rate (g) = 13.50% or 0.135Stock Price (P0) = $43.72We…
Q: Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 =…
A: Dividend = $1.50Growth rate = 8%Required rate of return = 14%
Q: .10 percent per year into the foreseeable future and the current price of Ivanhoe’s common shares is…
A: Given information :
Q: Pacific Wind and Solar pays a dividend at the end of the year of $6 per share, but over the year,…
A: The annual rate of return on the stock can be calculated as sum of dividend yield and capital gain…
Q: Solar Inc.’s current dividend = $19.50 per share. The dividend growth rate = 5%. The discount rate =…
A: Dividend discount model is the method to find the current price of the stock. Dividend with the…
Q: Fridgidaire Company earns $2.00 per share. Today the stock is trading at $40. The company pays an…
A: EPS = $ 2.00 Price of share = $ 40 Annual dividend = $ 1.00
Q: A company's last annual dividend was $2 a share. The company plans to pay $1.00 dividend per share…
A: Current value per share = Present value of future cash flows from the sharePresent value = Future…
Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.55 next year. The growth…
A: Current Share Price: The current price is sometimes referred to as the market value. When a share of…
Q: A. Judy's Boutique just paid an annual dividend of $3.61 on its common stock. The firm increases its…
A: The return that investors anticipate from their investment as compensation for the risk they assumed…
Q: A company currently issues dividends at a rate of $1.25 per share. It has cost of equity of 6% and…
A: The Dividend Discount Model (DDM) is a valuation method used to estimate the fair value of a stock…
Q: 4. Luke A. Manufacturing paid a dividend yesterday of $5 per share (D0= $5). The dividend is…
A: According to the Gordon growth model, the value of an equity share is the present value of dividends…
Q: Chelsea Fashions recently paid an annual dividend of $1.20 per share. The estimated dividend growth…
A: Using Dividend discount model,
Q: Dividends of $2.95 per share were paid by Overton & Co. over the last twelve months. Today the stock…
A: Last dividend (D0) = $ 2.95 Current stock price (P0) = $ 63.40 Discount rate (R) = 12.76%
Q: XYZ Co. will pay a $4.20 per share dividend on common stock at the end of the year. The Ke = 11.8%.…
A: Price of stock can be determined by the dividend discount model based on constant growth rate of…
Q: company has stock which costs $45.00 per share and pays a dividend of $2.50 per share this year. The…
A: We can use the dividend discount model here. As per the dividend discount model: P0 = D1/(r-g) where…
Q: The Down and Out Co. just issued a dividend of $1.06 per share on its common stock. The company is…
A: Cost of equity is calculated using following equation Cost of equity = D0×1+gP0+g Where, D0 is…
Q: A company has stock which costs $42.00 per share and pays a dividend of $2.30 per share this year.…
A: The dividend discount model is the model of stock valuation that assumes that the current value of a…
Q: The Pierce Co. just issued a dividend of $3.00 per share on its common stock. The company is…
A: Company's Cost of equity = [Dividend * (1+growthrate) / Current Price] + growth rate
Q: A company has an ROE of 12% and payouts 44% of its earnings as dividends. It is planning to pay a…
A: Dividend is the part or share of profits that is being distributed to shareholders of the company.…
Q: Maytag Company earns $2.30 per share. Today the stock is trading at $43. The company pays an annual…
A: The details are as under EPS = $ 2.30 per share MPS = $ 43 per share DPS = $ 1.30 per Share…
Q: 4. Grace Manufacturing paid a dividend yesterday of $5 per share (D0 = $5). The dividend is expected…
A: This approach can be used by investors to find the cost of equity financing. If an investor wants to…
Q: Red, Incorporated, Yellow Corporation, and Blue Company each will pay a dividend of $1.50 next year.…
A: As the growth rate is constant and lower than the required return, we can apply the constant…
Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.50 next year. The growth…
A: The share price is the current market price of the share. It is the price of the share at any…
Q: A company has stock which costs $42.25 per share and pays a dividend of $2.90 per share this year.…
A: We require to calculate the annual growth rate of dividends from the following details: Stock price…
Q: Mike Energy has been paying dividends steadily for 20 years. During that time, dividends have grown…
A: Solution:- Cost of common equity means the required rate of return of equity shareholders. It is…
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A: Under dividend growth model, valuation of common stock is done by assuming that dividends keep…
Q: At the beginning of last year an investor purchased 300 shares of common stock from MRP Corporation…
A: Rate of return is that rate of return which is earned by the investor on his investment. It includes…
Q: A company has an ROE of 12% and payouts 41% of its earnings as dividends. It is planning to pay a…
A: The dividend growth rate can be calculated as the sustainable growth rate.
Q: wildhorse corporation common shares are trading at $20 per share and paid a dividend of 1.60 per…
A: In the given case, we have provided the current market price per share, last year paid dividend per…
Q: Growth Company's current share price is $20.05 and it is expected to pay a $1.15 dividend per share…
A: The dividend payout ratio is the ratio that determines the net proportion of dividends paid out of…
Q: The Midfield Co. just issued a dividend of $1.36 per share on its common stock. The company is…
A: According to Gordon's growth model,Po= wherePo= price of stockDo= dividend paidg= growth ratek= cost…
Q: Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the…
A: Cost of retained earnings: It implies to the cost that is borne by the business in relation to the…
Q: Boehm Incorporated is expected to pay a $5.00 per share dividend at the end of this year (i.e., D1 =…
A: Expected dividend per share = $5.00 per shareRequired rate of return = 11%Growth rate = 8%
Q: Easttown Productions just paid an annual dividend of $7.85 per share. Future dividends are expected…
A: Dividend discount model is one of the method used for calculating stock price. It uses next year…
Q: The Lory Company had net earnings of $127,000 this past year. Dividends of $38,100 were paid. The…
A: The Dividend Discount Model, or DDM, based onCalculate the intrinsic value of share using the…
Q: What is the cost of internal common equity (retained earnings) if the long-term growth in dividends…
A: The cost of retained earnings doesn't involve any explicit cost but involves the opportunity cost.…
Q: Membo Inc. just paid a dividend of $4.6 per share. Dividends are expected to grow at 6%, 5%, and 3%…
A: Dividends are a share of profit extended by the issuing company to their shareholders. The growth…
Q: This year, Hope Corporation paid a dividend of $0.50 per share. The company expect dividends to…
A: Value of share price = [D0 x (1 + g)]/(r - g) D0 = Current dividend g = Growth rate r = required…
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- The Pierce Co. just issued a dividend of $2.04 per share on its common stock. The company is expected to maintain a constant 8 percent growth rate in its dividends indefinitely. If the stock sells for $43.20 a share , what is the company's cost of equity?The current yield on stock invested in Lynx Corporation is 4.2%. The dividend last year was $3.25 per share. What was the selling price of the stock?The expected dividends of Northwestern Mutual are now $10, $37, -$22, $17, and $133 in the following 5 years. What is the present value of the stock? Assume that its discount rate is 4.14%. A. $104.57 B. $147.28 C. $180.85 D. $200.75
- Breakaway wealth had net earnings of $336,000 this past year. dividends were paid of $77,280 on the company's book equity of $2,800,000. if Safeway has 175,000 shares outstanding with a current market price of $21 per share, what is the required rate of return?Countess Corp. is expected to pay an annual dividend of $3.97 on its common stock in one year. The current stock price is $68.04 per share. The company announced that it will increase its dividend by 3.20 percent annually. What is the company's cost of equity?Noto Inc. just paid a dividend of $4.6 per share. Dividends are expected to grow at 6%, 5%, and 3% for the next three years respectively. After that the dividends are expected to grow at a constant rate of 2% indefinitely. Stockholders require a return of 9 percent to invest in Noto’s common stock. Compute the value of Noto’s common stock today.
- A company recently paid a $1.35 dividend. The annual dividend is expected to grow at a 18.5 percent rate. At a current stock price of $40.85, what return are shareholders expecting? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16))Ellington Electronics wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $3.70 per share, and the current price of its common stock is $76 per share. The expected growth rate is 7 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Compute the cost of retained earnings (Ke). Cost of retained earnings % b. If a $7.0 flotation cost is involved, compute the cost of new common stock (Kn). Cost of new common stock %The Beta Company has 1,000,000 common share outstanding. The company paid dividends of $2,000,000 on common stock this year. Dividends are expected to grow at a rate of 5% per year and the required rate of return on common stock is 6%. What is the value of a share of Beta Company's common stock?
- Growth Company's current share price is $20.10 and it is expected to pay a $0.95 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.5% per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a $2.00 per share fixed dividend. If this stock is currently priced at $28.15, what is Growth Company's cost of preferred stock? c. Growth Company has existing debt issued three years ago with a coupon rate of 6.2%. The firm just issued new debt at par with a coupon rate of 6.3%. What is Growth Company's pretax cost of debt? d. Growth Company has 4.9 million common shares outstanding and 1.2 million preferred shares outstanding, and its equity has a total book value of $50.1 million. Its liabilities have a market value of $20.2 million. If Growth Company's common and preferred shares are priced as in parts (a) and (b), what is the market value of Growth Company's assets? e.…Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $4.15 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company’s stock is 8 percent, 11 percent, and 14 percent, respectively. What is the stock price for each company? What do you conclude about the relationship between the required return and the stock price?Nuts Incorporated is expected to pay annual dividends of $3.33 and $4.44 at the end of the next two years, respectively. After that, the company expects to pay a constant dividend of $4.66 a share. What is the value of this stock at a required return of 10.8 percent? $27.11 O $28.05 $28.23 $28.36 O $31.08 0000 247