A stock you are evaluating just paid an annual dividend of $2.10. Dividends havegrown at a constant rate of 1.2 percent over the last 15 years and you expect this tocontinue.a. If the required rate of return on the stock is 12.2 percent, what is its fair presentvalue?b. If the required rate of return on the stock is 15.2 percent, what should the fair valuebe four years from today?Note: For all requirements, do not round intermediate calculations. Round youranswers to 2 decimal places. (e.g., 32.16)a. Fair present valueb. Expected fair valueAmount

Given:Last dividend paid (D0D_0D0) = $2.10Growth rate (g) = 1.2% or 0.012Required rate of return…

Answered: A stock you are evaluating just paid an…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

A stock you are evaluating just paid an annual dividend of $2.50. Dividends have grown at a constant rate of 1.5 percent over the last 15 years and you expect this to continue, if the required rate of return on the stock is 12 percent, what is its fair present value and if the required rate of return on the stock is 15 percent, what should the fair value be four years from today?
a. If your required rate of return is 7.60percent, what is the value of the stock for you? b. Should you make the investment
A stock you are evaluating just paid an annual dividend of $2.80. Dividends have grown at a constant rate of 2.6% over the last 15 years and you expect this to continue. a. If the required rate of return on the stock is 12.9%, what is its fair present value?
The common stock of PG paid RM1.32 in dividends last year. Dividends are expected togrow at an 8 percent annual rate for an indefinite number of years.a. If PG’s current market price is RM23.50 per share, what is the stock’s expected rate of return? b. If your required rate of return is 10.5 percent, what is the value of stock for you?c. Should you make the investment?
A stock currently pays a dividend of $2.50 for the year. Expected dividend growth is 15% for the next three years and then growth is expected to revert to 7% thereafter for an indefinite amount of time. The appropriate required rate of return is 9%. What is this stock’s intrinsic value?
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 10% a year. If its required return is 15%, what is the stock's expected price 1 year from today? Do not round intermediate calculations. Round your answer to the nearest cent.
You expect a stock to pay annual dividends of $1.39, $1.16, and $1.87 in each of the next three years, with the first dividend payment occurring one year from today. You also expect a stock price of $33.19 immediately after the stock pays the third annual dividend (i.e., exactly three years from today). If the stock's required rate of return is 6%, what is a fair price for the stock today? Round your answer to the nearest penny: Type your answer.....
A stock is expected to pay a dividend of $1.75 at the end of the year (i.e., D1 = $1.75), and it should continue to grow at a constant rate of 5% a year. If its required return is 15%, what is the stock's expected price 2 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.
The current price of a stock is $70. If dividends are expected to be 2 per share for the next twoyears, and the required return is 10%, then what should the price of the stock be in 3 yearswhen you plan to sell it? If the dividend and required return remain the same, and the stockprice is expected to increase by 2 two years from now, by how much is the current stock priceis expected to increase?
You are evaluating a company's stock. The stock just paid a dividend of $1.75. Dividends are expected to grow at a constant rate of 5 percent for a long time into the future. The required rate of return (Rs) on the stock is 12 percent. What is the fair present value? Please show all the steps, including the equation(s).
You just purchased a share of stock at a cost of $25. You expect the stock to pay you a dividend at the end of this year of $1.75 and the price of the security after the dividend is paid to be $27.50. Given this information, what is your expected annual return on this investment?. ... ..
(Common stock valuation) The common stock of NCP paid $1.32 in dividends last year. Dividends are expected to grow at an annual rate of 8.00 percent for an indefinite number of years. a. If your required rate of return is 10.50 percent, what is the value of the stock for you? b. Should you make the investment? a. If your required rate of return is 10.50 percent, the value of the stock for you is $ nearest cent.) (Round to the

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS