A stock is expected to pay a dividend of Php0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price? Group of answer choices Php18.29 Php19.22 Php17.39 Php17.84 Php18.75

A stock is expected to pay a dividend of Php0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price? Group of answer choices Php18.29 Php19.22 Php17.39 Php17.84 Php18.75

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Wolfwire industries is expected to pay a dividend of $3.50 next year (D₁) and has a beta of 1.5.…

A: Risk free rate (Rf) = 0.04 or 4% Market rate of return (Rm) = 0.12 or 12% Beta (b) = 1.5 Required…

Q: A common stock has expected year-end dividend is D1 = ₱1.60, its required return is rs = 11.00%, its…

A: growth rate = expected return - dividend yield = 11 - 6 = 5% dividend yield = dividend/price price…

Q: A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the…

A: Current stock price is calculated using constant dividend growth model given below Current stock…

Q: A stock is expected to pay a dividend of $1.76 at the end of the year. The required rate of return…

A: In the given case, we have provided the expected dividend per share, a constant growth rate and the…

Q: Earnings this year will be $6 per share, and investors expect a rate of return of 8% on stocks…

A: Sustainable Growth Rate (SGR):The sustainable growth rate (SGR) is a measure that represents the…

Q: A share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a…

A: Expected Return = Risk free rate + Market risk premium * Beta

Q: A stock is expected to pay a dividend of $0.55 for each quarterly in the next four quarters. The…

A: Variables in the question: Description DataExpected dividend each quarter ($)0.55Required rate of…

Q: a) Consider these three stock returns with the following annualised characteristics: Stock A Stock B…

A: The capital asset pricing model is a linear regression model that takes into account the beta,…

Q: A stock is expected to pay a dividend of $0.55 at the end of the year. The required rate of return…

A: To calculate the price of share or stock, we have to use the following formula: Price of stock =…

Q: The stock price is P39.77, the required rate of return of shareholders is 12.4%, and the annual…

A: The growth rate can be calculated as per the dividend discount model.

Q: A stock just paid $3.2 dividend yesterday. The dividend is expected to grow at 2.0% per year…

A: Stock price is the selling price at which the stock trades on an exchange. It is the price which the…

Q: A stock is expected to pay a dividend of $1.26 at the end of the year. The required rate of return…

A: Formula: Current stock = Expected dividend/(Required rate - Growth rate)

Q: Suppose Dragons, Inc. is expected to pay an annual dividend of $0.85 at t=1. Thereafter the dividend…

A: D1=$0.85r=8%g2-3=25%g=3%

Q: A share of stock is now selling for $95. It will pay a dividend of $5 per share at the end of the…

A: To find out the expected selling price of the stock at the end of the year, we need to find out the…

Q: A stock is expected to pay a dividend of $1.25 at the end of the year. The required rate of return…

A: Formula to be used : Current price=D1/(Required return-Growth rate)

Q: A stock is expected to pay a dividend of $2.75 at the end of the year (i.e., D1 = $2.75), and it…

A: Quantum and timing of dividends from a stock are known to us. We have to find the stock's expected…

Q: Yharnam Co. is expected to pay a dividend of D1 = $1.40 per share at the end of the year, and that…

A: Using CAPM, Expected Return = Risk free rate + beta * market risk premium Expected Return = 3.90% +…

Q: ven the following information for the stock of Foster Company, calculate the risk premium on its…

A: Price of Stock(Po) = Dividend per share next year(D1)/(Expected return - Dividend growth rate)…

Q: A stock is expected to pay a dividend of S0.75 at the end of the year. The required rate of return…

A: The Dividend Growth Model refers to a model that helps in calculating the intrinsic value of a stock…

Q: Analysts expect Exxon Mobil stock to pay a dividend of $3.43 in 1 year and is expected to sell for…

A: Expected dividend of Stock in year 1(D1) = $3.43 Expected Selling Price of Stock in year 1(P1) =…

Q: Dyer Furniture is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and…

A: Expected Dividend = d1 = $1.25Growth rate = g = 6%Beta = b = 1.85Market risk Premium = mrp =…

Q: A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return…

A: Next Year dividend = d1 = $0.75 Required Rate of Return = r = 10.5% Growth Rate = g = 3%

Q: A stock is currently selling for $97.84 and is expected to sell for $107.31 in 1 year. If the…

A: We are given that:P1 (Price after one year) = $107.31P0 (current price) = $97.84D (Dividend income)…

Q: What is the expected rate of return for this non-constant growth stock? You have evaluated this…

A: A rate of return is the net profit or loss on an investment over a given period of time represented…

Q: stock is expected to pay a dividend of $1.50 at the end of the year (i.e., D1 = $1.50), and it…

A: In this we have to use dividend discount model to calculate the price of stock.

Q: LotsaDough's common stock is expected to pay a dividend of $1.20 next year, with a forecasted…

A: Next year dividend (D1) = $1.20 Growth rate (g) = 0.07 Stock price (P0) = $12.50 Cost of common…

Q: Given the following data, what is the stocks expected growth rate according to the Gordon model?…

A: Given:Dividend per share just paid = $4.50Current market price = $40.00Required rate of return (r) =…

Q: A stock is expected to pay a dividend of $3 at the end of this year (this is Div1), and it should…

A: Dividend (D1)= 3 Growth rate =6.70% Required return =11.90%

Q: Thecovarianceofthemarket'sreturnwithaStockA'sreturnis0.003andthestandarddeviation of the market's…

Q: A stock is expected to pay dividends in 8 periods. The first dividend will be $2.55 and subsequent…

A: The current value of the firm or stock is the present value of all the future dividend payments…

Q: Compute the annual expected return on a stock which has a market price of $112, pays no dividend and…

A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount initially…

Q: A stock is expected to pay a dividend of $1.76 at the end of the year. The required rate of return…

A: The dividend growth model will be used to calculate the stock price. This model values a company's…

Q: A stock pays a yearly dividend of $2.16, expected to grow by 0.4% per year forever. If the stock is…

A: Dividend per Share = $2.16Current Price = $27.26Growth Rate = 0.4% = 0.004The prevailing market rate…

Q: A stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it…

A: Next dividend (D1) = $1.00 Growth rate (g) = 10% Dividend after 5 years (D5) = D1*(1+g)4…

Question

A stock is expected to pay a dividend of Php0.75 at the end of the year. The required rate of return is r_s = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price?

Group of answer choices

Php18.29

Php19.22

Php17.39

Php17.84

Php18.75

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Consider an example. Assume a share of preferred stock with the following characteristics: Par value $100 Dividend rate 3.0% per year Payment schedule semiannual Maturity date You are analyzing this preferred stock for possible purchase. Your required rate of return on this stock is 5% per year, compounded semiannually. Draw a time line showing the expected dividends for this preferred stock. Calculate the value of this preferred stock based on the required rate of return. Assume that the current market price for this preferred stock is $75 per share. Calculate the expected return based on the market price. Should you invest in the stock? Why or why not? Be sure to use your results from BOTH parts B and C above. You are analyzing a share of XYZ…
A stock price P0=$23, and is expected to pay D1 = $1.242 one year from now and to grow at a constant rate of g=8% in the future. Suppose this analysis was conducted in January 1, 2002, what is the expected price at the end of 2002 and what is the Capital gains yield?
A stock just paid a $1.9 dividend yesterday. The dividend is expected to grow at 1.2% per year thereafter. If the required rate of return of the stock is 10.1%, then using the dividend discount model, the stock price should be__
A stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it should continue to grow at a constant rate of 5% a year. If its required return is 12%, what is the stock's expected price 4 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. $
Assume that a stock is giving $2 dividends and the expected rate of return is 10%, how much the stock price will be selling today?
A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 8.5%, and the constant growth rate is g = 4.0%. What is the current stock price? Select the correct answer. a. $35.57 b. $36.47 c. $37.37 d. $38.27 e. $34.67
A stock is expected to pay a dividend of $1.50 at the end of the year (i.e., D1 = $1.50), and it should continue to grow at a constant rate of 9% a year. If its required return is 14%, what is the stock's expected price 1 year from today? Do not round intermediate calculations. Round your answer to the nearest cent.
A share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a year-end dividend of $5. The T-bill rate is 1%, and the market risk premium is 6%. If the stock is perceived to be fairly priced today, what much be investors' expectation of the price of the stock at the end of the year? $_ Hint: [CAPM] Expected Return (R) = Rf + Beta *Market Risk Premium; Expected Return (R) = Dividend Yield + Capital Gains Yield, where dividend yield=D1/PO and capital gains yield = (P1-Po)/PO
A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 9.0%, and the constant growth rate is g = 4.0%. What is the current stock price? Select the correct answer. a. $31.20 b. $33.18 c. $30.21 d. $34.17 e. $32.19
A stock is expected to pay a dividend of $1.99 at the end of the year. The required rate of return is rs = 13.82%, and the expected constant growth rate is g = 8.0%. What is the stock's current price?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. A. $39.61 B. $29.71 C. $34.14 D. $42.68 E. $35.51
Help
A stock is expected to pay a dividend of $2.33 at the end of the year. The required rate of return is rs = 21.0%, and the expected constant growth rate is g = 6.0%. What is the stock's current price?