A company is expected to pay out 40% of its expected earnings per share of €0.5 next year as dividends. The earnings are expected to grow 2% per year in perpetuity and the cost of equity is 7%. Supposing that the company is a stable growth dividend paying, calculate the expected PE ratio. 4 8 10 20 25

Q: Invest $3,000 per year starting next year for 37 years earning 8% per year, what is the future…

A: Given , Annual Investment (P) = $ 3,000Annual Interest(r) = 8% i,e, 0.08No of years (n) = 37 YearsTo…

Q: Arts and Crafts Inc. will pay a dividend of $5 per share in 1 year. It sells at $50 a share, and…

A: Constant growth model  is a dividend valuation approach which assume dividend will grow at a…

Q: Brandt Enterprises is expecting rapid growth for the next 2 years. They JUST PAID divident (D0) of…

A: Hence, Dividend after year 1 (D1) is 1.875, which is determined by multiplying the initial dividend…

Q: 3. Consider company ABC. Today it is the 1st of January 2022. The expected earnings of ABC (in…

A: Step 1:We have to calculate the value of the stock today. for this, first of all, we have to…

Q: Assume that a firmʹs earnings are expected to be $11 million next year and that this number is…

A: A ratio that provides information regarding the share price of a company by relating it to the…

Q: IBM expects to pay a dividend of $2 next year and expects these dividends to grow at 8% a year. The…

A: To Find: Cost of equity capital

Q: Assume that the economy can experience high growth, normal growth, or recession. Under these…

A: The expected return can be found by finding the sum of all the returns after multiplying with their…

Q: the dividend yield and capital gain yield over the first year?

A: Information Provided: Dividend growth rate = 5% Next Dividend = $3.50 Required return = 13%

Q: Constant-growth DCF model (S4.4) Company Z's earnings and dividends per share are expected to grow…

A: In the given case, we have provided the expected dividend per share for the next year , constant…

Q: Ramirez Company's current dividend is $2.00. Its dividend growth rate is expected to be at 40% for 2…

A: In calculation of stock price when there is variable growth rate will first calculating the expected…

Q: A firm will pay an annual dividend of $6 on its common stock in one year, and its dividend will grow…

A: Next dividend (D1) = $6 Growth rate = g Stock price (P0) = $88 Cost of equity (r) = 12%

Q: an.3 suppose a firm just paid a dividend of Sl.00 . You expect that the firm willgrow at 40% next…

A: First, we need to calculate the dividends for the first two years. The dividend for the first year…

Q: 10. Company Z's earnings and dividends per share are expected to grow indefinitely by 5% a year. If…

A: The present value of growth opportunities can be calculated using this formula,

Q: Consider company ABC. Today it is 1st of January 2023 and ABC has just paid a dividend of £3…

A: The Dividend Discount Model (DDM) is a method of valuing stocks by estimating the present value of…

Q: Halliford Corporation expects to have earnings this coming year of $2.71 per share. Halliford plans…

A: Growth rate =Previous year Retention ratio * ROEEPS =Previous year EPS *(1+growth rate) Dividend =…

Q: A company expects a 20% return on equity invested entirely in new projects. The company's management…

A: Return on equity = 20%Retention ratio =30%Earnings per share = €3Expected return  = 12%

Q: what is the Present Value of Growth Opportunities (PVGO) if the company reinvests 25% of its…

A: Present Value of Growth Opportunities (PVGO) is a concept that gives analysts a different approach…

Q: Louis Company expects to pay dividends next year for $ 4. The dividend growth rate for the next 3…

A: Stock price at the end of period = dividend * (1+Growth) / (required return - Growth )

Q: Suppose in 2023 the expected dividends of Fordson, Inc. stock will equal $260M with a discount rate…

A: SOLUTION:The DDM is a valuation model that estimates the present value of a company's stock based on…

Q: Suppose in 2023 the expected dividends of Fordson, Inc. stock will equal $260M with a discount rate…

A: The objective of the question is to determine the change in the value of Fordson, Inc. if the…

Q: Company Z earnings and dividends per share will grow indefinitely by 4.9% a year if next year's…

A: The present value of growth opportunities refers to the component of the value of stock that the…

Q: Greshak Ltd. forecasts its long-term sustainable growth rate to be 4.0%. If the firm's required rate…

A: Given details are : Sustainable growth rate (g) = 4% = 0.04 Required rate of return (r) = 12% = 0.12…

Q: A company is forecasted to generate free cash flows of $49 million for the next three years. After…

A: Given Free cash flow = $49 million Debt =$42 million Cash =$ 6 million Share outstanding = 14…

Q: 1. Company Yoyo currently pays out a dividend of £2 per share. It reinvests 1/3 of earnings in…

A: Growth rate g = Retention ratio * Return on Investment ( ROI ) Thus, g = 13×15% g = 5%   Current…

Q: Franktown Meats has just paid annual dividend of $2 per share. In the meantime, the company…

A: The Dividend growth Model (DGM) is utilized to ascertain the present value of a stock's forthcoming…

Q: Consider a firm that just paid a dividend of $5.50 per share. The company expects growth in the…

A: Dividend in Year 1: $5.50 * (1 + 17%) = $6.44Dividend in Year 2: $6.44 * (1 + 17%) = $7.53Dividends…

Q: A company will produce $3.00 in earnings per share at the end of the year. Reinvested earnings can…

A: We need to use formula below to calculate PVGO of the company. The equation is whereD1= next…

Q: Consider company ABC. Today it is 1st of January 2023 and ABC has just paid a dividend of £3…

A: Here, Old Dividend Payout Ratio is 50% New Dividend Payout Ratio after 2043 is 40% Recent Dividend…