DVD's Forever has seen its business decline. It recently paid a dividend of $1.80, but this dividend is expected to decrease by 6% forever. If the required rate of return is 8.57%, what is the value of one share of common stock? (Do not round intermediate answers, but round the final answer to two decimal places) O $48.34 O $10.92 O $51.42 O $11.61

DVD's Forever has seen its business decline. It recently paid a dividend of $1.80, but this dividend is expected to decrease by 6% forever. If the required rate of return is 8.57%, what is the value of one share of common stock? (Do not round intermediate answers, but round the final answer to two decimal places) O $48.34 O $10.92 O $51.42 O $11.61

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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Spytronic Listening Company's (SLC) latest annual dividend of $2.50 a share was paid yesterday. The company sees no growth for its dividends into the foreseeable future. How much should you be willing to pay for one share of SLC stock if you require a 12 percent return? $17.33 $18.83 $20.83 $21.83 $23.33
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XYZ Inc., has an odd dividend policy. The company has just paid a dividend of $11.00 per share and has announced that it will increase the dividend by $9.00 per share for each of the next four years, and then never pay another dividend. If you require a return of 16 percent on the company’s stock, how much will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Q: Corn, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it will increase the dividend by $2 per share for each of the next four years, and then never pay another dividend. suppose you require an 11 percent return on thecompany’s stock.Required:a) how much will you pay for a share today?b) Is the value of this stock dependent upon how long you plan to hold it? would this affect the value of the stock today?c) What happens if a company has a constant growth g that exceeds its cost of capital ks?Will many stocks have expected g> ks in the short run? In the long run (that is, forever)?
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Company Z-prime's earnings and dividends per share are expected to grow by 4% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year's dividend is $9, the cost of equity is 9%, and next year's EPS is $14. What is Z-prime's stock price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Stock price

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