Dishwasher's Delights plows back 69.00% of its earnings to take on projects that earn the firm a rate of return of 13.00%. Dishwasher's stockholders require a return of 12.50% on their common stock. Earnings per share are expected to be $4.00 next year. a. What is the expected growth rate for Dishwasher's common stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Growth rate b. What is the expected dividend next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Dividend % c. What is the intrinsic value of Dishwasher's stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value

Dishwasher's Delights plows back 69.00% of its earnings to take on projects that earn the firm a rate of return of 13.00%. Dishwasher's stockholders require a return of 12.50% on their common stock. Earnings per share are expected to be $4.00 next year. a. What is the expected growth rate for Dishwasher's common stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Growth rate b. What is the expected dividend next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Dividend % c. What is the intrinsic value of Dishwasher's stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 24P: Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12%...

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Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12% rate of return. Although the dividend has been growing at a rate of 30% per year in recent years, this growth rate is expected to last only for another 2 years (g0,1 = g1,2 = 30%). After Year 2, the growth rate will stabilize at gL = 7%. What is CCC’s stock worth today? What is the expected stock price at Year 1? What is the Year 1 expected (1) dividend yield, (2) capital gains yield, and (3) total return? What is its expected dividend yield for the second year? The expected capital gains yield? The expected total return?
Sidman Products’s common stock currently sells for $60.00 ashare. The firm is expected to earn $5.40 per share this year and to pay a year-end dividendof $3.60, and it finances only with common equity.a. If investors require a 9% return, what is the expected growth rate?b. If Sidman reinvests retained earnings in projects whose average return is equal tothe stock’s expected rate of return, what will be next year’s EPS?
Sidman Products's common stock currently sells for $52 a share. The firm is expected to earn $4.68 per share this year and to pay a year-end dividend of $3.10, and it finances only with common equity. a. If investors require a 9% return, what is the expected growth rate? Do not round intermediate calculations. Round your answer to two decimal places. % b. If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS? (Hint: g = (1 - Payout ratio) ROE). Do not round intermediate calculations. Round your answer to the nearest cent. per share
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