A firm recently paid a $0.60 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In thefourth year, the stock price is expected to be $28.If the required return for this stock is 13.5 percent, what is its current value?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Current value

Absolutely, let's break down the steps involved in calculating the current value of the stock using…

Answered: A firm recently paid a $0.60 annual…

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

A stock is expected to pay a dividend next year of $2.3. The dividend amount is expected to grow at an annual rate of 5.1% indefinitely. Assuming a required return on the stock of 11.2% in the future, the dividend yield on the stock is ______%. Do not round any intermediate work, but round your final answer to 2 decimal places (ex: 12.34567% should be entered as 12.35).
An investor bought a stock for $18 (at t = 0) and one year later it paid a $2 dividend (at t = 1). Just after the dividend was paid, the stock price was $19 (at t = 1). Inflation over the past year (from t = 0 to t = 1) was 8% pa, given as an effective annual rate. Which of the following statements is NOT correct? All answer options are rounded to 6 decimal places. The stock investment produced a: Question 3 Select one: a. Nominal capital return of 5.555556% pa. b. Nominal total return of 16.666667% pa. c. Real capital return of 14% pa. d. Real income return of 10.288066% pa. e. Real total return of 8.024692% pa.
Carnes Cosmetics Co.'s stock price is $50, and it recently paid a $1.75 dividend. This dividend is expected to grow by 19% for the next 3 years, then grow forever at a constant rate, g; and rs = 15%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places.
The next dividend payment by Im, Incorporated, will be $1.48 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $27 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
The Starr Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely. Investors require an 11 percent return on the stock. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current price? Current price $ What will the price be in three years? Stock price $ What will the price be in 14 years? Stock price $
Carnes Cosmetics Co.'s stock price is $37, and it recently paid a $1.25 dividend. This dividend is expected to grow by 30% for the next 3 years, then grow forever at a constant rate, g; and rs = 16%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places.
Trump corporation's stock sells for $45.30 and is expected to pay a dividend of 2.40 next year. Dividends are expected to grow at 0.02 percent into the foreseeable future. What is the expected dividend yield on Trump stock for the first year? Answer should be to 2 decimals---Ex: .04 Be sure to round properly. ex. .036 rounds to .04 and .042 rounds to .04 Your Answer: Answer
Wilson's Furniture is experiencing good growth so has decided to commence paying dividends starting next year. The first dividend will be $1.95 a share with annual increases of 4 percent in the dividend amount. The discount rate is 13 percent. What will the value of this stock be five years from now? (do not round up intermediate calculation; round up final answer to two decimal places)
Suppose you bought a stock for $50 on January 1st. Six months later you received a dividend of $1.10 and you sold the stock for $53.30. Given this information, annualized return is ______________. answer is 17.6%
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $28.50 per share; its last dividend was $2.50; and it will pay a $2.70 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % If the firm's beta is 2.0, the risk-free rate is 5%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's…
Anthony Inc.’s common stock is currently selling for $20.00 per share. Their most recent annual dividend was $0.60, and the dividend is expected to grow at the rate of 10% annually in the future. What is the required return on Anthony’s common equity? Report the percentage to two decimal places
Carnes Cosmetics Co.'s stock price is $46, and it recently paid a $1.00 dividend. This dividend is expected to grow by 21% for the next 3 years, then grow forever at a constant rate, g; and rs = 14%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places. %

SEE MORE QUESTIONS

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