Financial Accounting Question please answer fast A stock will not pay dividends until three years from now. Thedividend then will be $2.00 per share, the dividend payoutratio will be 40 percent, and return on equity will be 15percent. If the required rate of return is 12 percent, which ofthe following is closest to the value of the stock?a. $27.b. $33.c. $53.d. $67.

Step 1: Define Dividend Payout RatioThe dividend payout ratio depicts the value of the income the…

Answered: A stock will not pay dividends until…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 19P

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A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?
Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year (D1 = $3.00); its beta is 0.8. The risk-free rate is 5.2%, and the market risk premium is 6%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $40 a share. Assuming the market is in equilibrium, what does the market believe will be the stock’s price at the end of 3 years (i.e., what is )?
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A stock is expected to pay $0.80 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 6.4%, what price would an investor be expected to pay per share five years into the future? OA. $22.90 OB. $21.23 OC. $20.43 O D. $22.65 O E. $12.50
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