Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)Stock priceCalculate the present value of these cash flows using a 13 percent discount rate. (Do not round intermediate calculations. Roundyour answer to 2 decimal places.)Present value Suppose that a firm's recent earnings per share and dividend per share are $2.55 and $1.40, respectively. Both are expected to growat 11 percent. However, the firm's current P/E ratio of 15 seems high for this growth rate. The P/E ratio is expected to fall to 11 within fiveyears.Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.)YearsFirst yearSecond yearThird yearFourth yearFifth yearDividends

Earnings per share = $2.55Dividends per share = $1.40Growth rate = 11%Expected PE ratio fall within…

Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price Calculate the present value of these cash flows using a 13 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places!

Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price Calculate the present value of these cash flows using a 13 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places!

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

See similar textbooks

Similar questions

Suppose you bought a stock for $45 on January 1st. Thirty days later you received a dividend of $2.2 and you sold the stock for $44.30. Given this information, annualized return is ______________. (Assume 360 days in a year.) answer is 40%
Suppose that you purchased a single stock five years ago for $1.22. The stock is now valued at $5.10 today. What has been the average annual percent growth in the price since you purchased it? Report your answer without the percentage symbol (for example, 75.2% would be 75.2)
Your friend told you about a stock that they think will sell for $154 in one year. They do not pay a dividend yet and it selling for $198.3 today. What is the expected return. Convert to a percent then round to 2 decimal places. Answer:
Global Logistics just announced it is increasing its annual dividend to $1.46 next year and will increase that dividend by 2.11 percent annually thereafter. How much will one share of this stock be worth ten years from now if the required rate of return is 13.1 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Please do both part
The Starr Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely. Investors require an 11 percent return on the stock. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current price? Current price $ What will the price be in three years? Stock price $ What will the price be in 14 years? Stock price $
you invested $2,000 in the stock market one year ago. Today, the investment is valued at $1,840. What return did you earn? (Negative answer should be indicated by a minus sign.) What return would you need to get next year to break even overall? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you $6,400 per year for 5 years. a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If the discount rate is 20 percent, what is the present value of these cash flows?
The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 8% per year in the future. Shelby's common stock sells for $26 per share, its last dividend was $2.00, and the company will pay a dividend of $2.16 at the end of the current year. a. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. 16.31 % b. If the firm's beta is 1.1, the risk-free rate is 9%, and the expected return on the market is 14%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. 14.50% c. If the firm's bonds earn a return of 11%, then what would be your estimate of rs using the own-bond-yield-plus-judgmental-risk-premium approach? (Hint: Use the mid-point of the risk premium range.) Round your answer to two decimal places. 14 % d. On the basis of the results of parts a-c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally.…
Return for the entire period is (Round to two decimal places.)
Suppose you invest $50 each month (starting today) into a mutual fund. You reinvest distributions. At the end of 5 years, you sell all your shares and receive $3,485. Calculate your rate of return.
Today, you sold your Riot Blockchain, Inc stock (ticker: RIOT) for $54.5/share. Last year, you paid $51.5/share for that stock. During the year, RIOT paid you $2/share in dividends. If inflation averaged 2.8% during the year, your approximate real rate of return on the RIOT investment is: a. 12.5 percent b. 9.7 percent c. 12.2 percent d. 3.5 percent e. 6.9 percent

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS