vipul You've collected the following information from your favorite financial website.52-Week PriceLo10.43 Acevedo .3633.4270.0013.95.20.74Hi77.4055.81131.03150.2435.00Stock (Dividend)Georgette, Incorporated 1.54YBM 2.50Manta Energy .80Winter Sports .32.Dividend PEYieldRatio2.63.82.85.21.5Answer is complete but not entirely correct.Current stock price$ 76.21 x61010628Close.Price13.9040.4389.0715.43??Net Change-.24-.013.07-.26.18According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20.5 percent. Suppose YBMmeets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.5 percent, indefinitely. Assumeinvestors require a return of 15 percent on YBM stock. According to the dividend growth model, what should the stock price be today?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The constant growth model is a stock valuation method used in finance to determine a stock's…

Answered: According to the dividend growth model,…

Business

Finance

According to the dividend growth model, what should the stock price be today?

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section17.4: Analyzing Financial Statements Using Financial Ratios

Problem 1WT

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Concept explainers

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.

Question

vipul

You've collected the following information from your favorite financial website.
52-Week Price
Lo
10.43 Acevedo .36
33.42
70.00
13.95.
20.74
Hi
77.40
55.81
131.031
50.24
35.00
Stock (Dividend)
Georgette, Incorporated 1.54
YBM 2.50
Manta Energy .80
Winter Sports .32.
Dividend PE
Yield
Ratio
2.6
3.8
2.8
5.2
1.5
Answer is complete but not entirely correct.
Current stock price
$ 76.21 x
6
10
10
6
28
Close.
Price
13.90
40.43
89.07
15.43
??
Net Change
-.24
-.01
3.07
-.26
.18
According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20.5 percent. Suppose YBM
meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.5 percent, indefinitely. Assume
investors require a return of 15 percent on YBM stock. According to the dividend growth model, what should the stock price be today?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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