**Dividend Growth Rate Calculation**Overton & Co. paid dividends of $2.95 per share over the past twelve months. The current stock price is $63.40, with a discount rate of 12.76%. Using the constant growth model, calculate the dividend growth rate percentage.**Options:**- **A. 7.75%**- **B. 12.19%**- **C. 4.65%**This is question 3 of 5 in the series.

Last dividend (D0) = $ 2.95 Current stock price (P0) = $ 63.40 Discount rate (R) = 12.76%

Answered: Dividends of $2.95 per share were paid…

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

ABC Corporation stock currently sells for $80.58 per share. The market requires a return of 12.9 percent on the firm's stock. If the company maintains a constant 3.26 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? Answer to two decimal places. C
See image below - This is all the information providedZeta Company recently paid a dividend of $4.00 per share and had earnings after taxes of $100.00, per share. This dividend payout ratio was the same as the company's historical average payout ratio. Also, analysts know the company's payout ratio has a standard deviation of ( rounded)
Easttown Productions just paid an annual dividend of $7.85 per share. Future dividends are expected to increase by 2 percent annually. What is one share of this stock worth at a required rate of return of 12.25 percent? A. $78.12 B. $100.88 C. $95.02 D. $76.59 E. $64.08
Company XYZ just paid a $2 dividend. Dividends are expected to grow at 25% for 3 years. The dividend growth rate settles at 6% thereafter. The discount rate during the high dividend growth rate period is 16%. The discount rate during the stable dividend growth rate period is 9%. Find the stock price.
Lawrence Industries' most recent annual dividend was $1.98 per share (D Subscript 0=$1.98), and the firm's required return is 13%. Find the market value of Lawrence's shares when dividends are expected to grow at 15% annually for 3 years, followed by a 4% constant annual growth rate in years 4 to infinity.
A stock just paid an annual dividend of $1.81 per share. The expected growth rate of the dividend is 5.02%. The required rate of return for the stock is 10.7% per annum. Based on the Constant Dividend Growth Model, what is the expected dividend yield for the stock for the coming year? Answer as a percentage, 2 decimal places (e.g., 12.34% as 12.34).
Circuit City Stores (CC) recently paid a $.16 dividend. The dividend is expected to grow at a 23 percent rate. At the current stock price of $7.96, what is the return shareholders are expecting?
The Pierce Co. just issued a dividend of $2.04 per share on its common stock. The company is expected to maintain a constant 8 percent growth rate in its dividends indefinitely. If the stock sells for $43.20 a share , what is the company's cost of equity?
The most recent dividend paid by Altier Corporation was $3.25. That dividend is expected to grow by 8% this year, and 7% in year two. Beginning in year three, the dividend is expected to grow at a constant rate of 5%. With a 12% required return, what is a share of this company's common stock worth today?
The current dividends paid on a common stock is $1/share. The return on common equity is 15%. Estimate the stock price when the growth rate is: 0% 5%

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

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

Dividends of $2.95 per share were paid by Overton & Co. over the last twelve months. Today the stock price is $63.40, and the company's discount rate is 12.76%. Assuming the constant growth model applies. the dividend growth rate percentage is: O A. 7.75%. O B. 12.19%. O C.4.65%.