Calculate today's stock price, based on the following information:Growth rate of dividends years 1 and 2 = 20%Growth rate of dividends years 3 and 4 = 15%Growth rate of dividends year 5 moving forward = 5%Last dividend paid = $1.00Required rate of return based on the riskiness of this stock = 12%(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Do not input a cNumeric Response

Here, Current Dividend$1.00Growth Rate for next 2 years20%Growth Rate for Year 3 and 415%Growth…

Answered: Calculate today's stock price, based on…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. Current price per share of common stock $47.02 Expected dividend per share next year $2.46 Constant annual dividend growth rate 5.9% Risk-free rate of return 3.9% The risk premium on Foster stock is ___%
You are considering the purchase of a new stock. The stock is expected to grow at 2.52% for the foreseeable future and just paid a $2.88 dividend (D0). The required return is 8.2%. Based on this, what is the value of the stock? Round calculations to the nearest cent.
Find the annualized holding rate of return and the average rate of return for a stock that returned -30% in year 1 and +30% in year 2. Annualized holding rate of return = -7.00% A. -9.00% B. -15.00% C. 0.00%
A stock that just paid a $1.15 annual dividend, will pay a $1.39 annual dividend next year, and will maintain that level of dividend growth forever. If the stock has a dividend yield of 6.7%, what rate of return are investors requiring on this stock? Ⓒa. 27.57% ✔ b. 22.87% c. 30.65% d. 31.97% O e. 32.33%
need answer please
You observe a stock price of $18.75. You expect a dividend growth rate of 5%, and the most recent dividend was $1.50. What is the required return? Solve using Excel
A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $59. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $44. What are the dividend yield and percentage capital gain in this case?
A stock just paid a dividend of $3.85 and is expected to maintain a constant dividend growth rate of 4.9 percent indefinitely. If the current stock price is $62, what is the required return on the stock?
A preferred stock will pay a dividend of $1 per quarter. If the annual return is 6.06%, what is the stock worth today?
If a stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is correct? Select one: O a. O b. O c. The stock's dividend yield is 5%. The price of the stock is expected to decline in the future. The stock's required return must be equal to or less than 5%. Od. The stock's price one year from now is expected to be above the current price. e. The expected return on the stock is 5% a year.
Find the value of a stock using the constant growth DDM, if the last dividend paid is $3 and the beta=1.3, market risk premium is 8%, risk free rate is 2.6% and the dividend growth rate is 2%?
Consider a stock that wil have price of $31 54 one year from now and pay a dividend of $3.28 in one year. The expected rate of returm is 3.5%. What is the current price of the stock? Enter your response below rounded to 2 DECIMAL PLACES. Number

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