9. (RWJ, exercise 5.19) Whizzkids Inc., is experiencing a period of rapid growth. Earningsand dividends are expected to grow at a rate of 18% during the next two years, 15% in thethird year, and at a constant rate of 6% thereafter. Whizzkids' last dividend, which has justbeen paid, was $1.15. If the required rate of return on the stock is 12%, what is the price ofthe stock today?

Where,P0 = Stock valueD0 = Current dividendg = growth rate in decimal format D0 ( 1 + g) =Expected…

Answered: 9. (RWJ, exercise 5.19) Whizzkids Inc.,…

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

See similar textbooks

Similar questions

H3. Please show proper step by step calculation
b) John Cook Inc., is a growing rapidly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $1.90, what is the current share price?
Tin-Tin Waste Management, Inc., is growing rapidly. Dividends are expected to grow at rates of 30 percent, 35 percent, 25 percent, and 18 percent over the next four years. Thereafter, management expects dividends to grow at a constant rate of 7 percent. The stock is currently selling at $46.48, and the required rate of return is 18.0 percent. Compute the dividend for the current year (D0). (Round intermediate calculations and final answer to 2 decimal places Riker Departmental Stores management has forecasted a growth rate of 40 percent for the next two years, followed by growth rates of 25 percent and 20 percent for the following two years. It then expects growth to stabilize at a constant rate of 7.5 percent forever. The firm paid a dividend of $3.46 recently. If the required rate of return is 18 percent, what is the current value of Riker's stock? (Round intermediate calculations and final answer to 2 decimal place You own a company that competes with Old World DVD Company.…
Synovec Company is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next 3 years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 12 percent and the company just paid a $1.90 dividend. what is the current share price?
YZ Inc. is experiencing rapid growth. Earnings and dividends are expected to grow at a rate of 17% during the next 2 years, at 15% the following year, and at a constant rate of 7% during Year 4 and thereafter. Its last dividend was $1.55, and its required rate of return is 12%. a. Calculate the value of the stock today. b. Calculate P1 and P2 (Prices for Year 1 and Year 2). c. Calculate the dividend and capital gains yields for Years 1, 2, and 3.
9
Tattletale News Corp. has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 3 years. The last dividend paid was $12. The discount rate is 25% and the steady growth rate after 3 years is 3%. a. What is the capital gain in stock price from year O to year 1? (Do not round intermediate calculations. Enter your answer as a dollar amount rounded to 3 decimal places.) Capital gain b. Calculate the expected rate of return. (Do not round intermediate calculations. Round your answer to the nearest whole percent.) Expected rate of return
Financial analysts forecast Safeco Corp.'s (SAF) growth rate for the future to be 10 percent. Safeco's recent dividend was $1.4 What is the value of Safeco stock when the required return is 12 percent? ( Round your answer to 2 decimal places.)
GMC is growing quickly. Dividends are expected to grow at a rate of 6 percent for the next three years, with the growth rate declining to a constant 2 percent thereafter. If the required return is 10 percent for the first two years and then 8 percent thereafter. The company just paid a dividend of $4, what is the current share price? A. $62.00 B. $77.48 C. $73.19 D. $84.52
Orkazana Corporation is experiencing rapid growth. Dividends are expected to grow at 30 percent per year during the next three years, 20 percent over the following year, and then 5 percent per year indefinitely. The required return on this stock is 12 percent, and the stock currently sells for $80 per share. What is the projected dividend for the coming year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Projected dividend
2. Intel just paid an annual dividend of $2 a share. Management estimates the dividend will increase by 10 percent a year for the next two years. After that, the dividend growth rate is estimated at 5 percent. The required rate of return is 12 percent. What is the value of this stock today?
ATX Corp. just paid a dividend of $1.20 per share. The dividends are expected to grow at 30 percent for the next 8 years and then level off to a growth rate of 7 percent indefinitely. If the required return is 14 percent, what is the price of the stock today?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS