A metal manufacturing company is going public by offering their shares at $79 with $3 as annual dividends to the open market. According to the company’s business trend, it is expected to grow at 2.4% per year. What would be your advice to a group of investors interested on inves)ng 25% of their quarter profits as long as they have a 12% guaranteed retur

A metal manufacturing company is going public by offering their shares at $79 with $3 as annual dividends to the open market. According to the company’s business trend, it is expected to grow at 2.4% per year. What would be your advice to a group of investors interested on inves)ng 25% of their quarter profits as long as they have a 12% guaranteed retur

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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A6)
Miller Hardware paid an annual dividend of $1.10 per share recently. Today, the company announced that future dividends will be increasing by 3.5 percent annually. If you require a 12 percent rate of return, how much are you willing to pay to purchase one share of this stock today? Solve using excel
2- Jackson Inc. will pay a 3.40 per share dividend next year. The company pledges to increase its dividends by 4.5% per year indefinitely. If you require an 11% return on investment, how much will you pay for the company’s stock today?
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What is the answer ?