Cyclops Visor Corporation just issued dividends of P25.00 for a share of its common stocks. The current price of a share is P800.00. If a Cyclops stock has an annual growth rate of 10%, determine its market value after three years for an investor to realize a 20% rate of return. (Ans. P1273.25/share)

Cyclops Visor Corporation just issued dividends of P25.00 for a share of its common stocks. The current price of a share is P800.00. If a Cyclops stock has an annual growth rate of 10%, determine its market value after three years for an investor to realize a 20% rate of return. (Ans. P1273.25/share)

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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A7X Corp. just paid a dividend of $2.00 per share. The dividends are expected to grow at 23 percent for the next eight years and then level off to a growth rate of 6 percent indefinitely. If the required return is 12 percent, what is the price of the stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Boehm Incorporated is expected to pay a $1.40 per share dividend at the end of this year (i.e., D1 = $1.40). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 18%. What is the estimated value per share of Boehm's stock? Do not round intermediate calculations.
The stock price of QRS Inc. is $68. Investors require 11% return on similar stocks and QRS Inc. plans to pay a dividend of $3.85 next year. What growth rate is expected for the stock?
BioScience Inc. will pay a common stock dividend of $5.20 at the end of the year (D1). The required return on common stock (Ke) is 14 percent. The firm has a constant growth rate (g) of 7 percent. Compute the current price of the stock (P0). (Do not round intermediate calculations. Round the answer to 2 decimal places.)
Jiffy Co. expects to pay a dividend of $3.00 per share in one year. The current price of Jiffy common stock is $60 per share. What is the cost of internal common equity (retained earnings) if the long-term growth in dividends is projected to be 9 percent indefinitely? a. 15 percent b. 14 percent c. 16 percent d. 13 percent
Tresnan Brothers is expected to pay a $3.60 per share dividend at the end of the year (i.e., D1 = $3.60). The dividend is expected to grow at a constant rate of 9% a year. The required rate of return on the stock, rs, is 12%. What is the stock's current value per share? Round your answer to the nearest cent.
Staggert Corp. will pay dividends of $5.00, $6.25, $4.75, and $3.00 in the next four years. Thereafter, the company expects its dividend growth rate to be constant at 7.0 percent. If the required rate of return is 17.0 percent, what is the current value of the stock? (Round intermediate calculations and final answer to 2 decimal places, e.g. 16.25.) Current Value $ ________________
Arcs and Triangles paid an annual dividend of $1.47 a share last month. The company is planning on paying $1.52, $1.58, and $1.60 a share over the next three years, respectively. After that, the dividend will be constant at $1. 79 per share per year. What is the market price of this stock if the market rate of return is 10.0 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The last dividend paid by National Company was P2.00. National Company’s growth rate is expected to be a constant 5 percent for 2 years, after which dividends are expected to grow at a rate of 10 percent forever. National Company’s required rate of return on equity (rs) is 12 percent. What is the current price of National Company’s common stock? Answer Format: 111.11
Titan Technology's common stock pays a dividend that is expected to grow at 8% for one year and then grow at a more normal rate of 5% thereafter. Assume the current dividend is $1 per share and the required rate of return is 11% for common stock. Based on the above, what is Titan Technology's stock price? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Numeric Response
The Fl Corporation's dividends per share are expected to grow indefinitely by 8% per year. Required: a. If this year's year-end dividend is $3.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? Note: Round your answer to 2 decimal places. b. If the expected earnings per share are $9.00, what is the implied value of the ROE on future investment opportunities? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Current stock price b. Value of ROE c. Amount % per share
Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $1.44 per share, and its annual dividend is expected to grow at a constant rate (g) of 3.00% per year. If the required return (rss) on SCI’s stock is 7.50%, then the intrinsic value of SCI’s shares is $32.96 per share. Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting Inc.: • If SCI’s stock is in equilibrium, the current expected dividend yield on the stock will be_________per share. • SCI’s expected stock price one year from today will be________per share. • If SCI’s stock is in equilibrium, the current expected capital gains yield on SCI’s stock will be ________per share.

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