FCFE1 18B. FCFF Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%. The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%. What is the value of this stock if there are 500,000 outstanding shares? 3 4 5 $1.0000 g Yr 2-3 years 25.00% g Yr 4 year 10.00% g Year 5+ 3.00% k 12.50% PVFCFE # of shares 500,000 Stock Price Kohelin - 1.0

FCFE1 18B. FCFF Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%. The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%. What is the value of this stock if there are 500,000 outstanding shares? 3 4 5 $1.0000 g Yr 2-3 years 25.00% g Yr 4 year 10.00% g Year 5+ 3.00% k 12.50% PVFCFE # of shares 500,000 Stock Price Kohelin - 1.0

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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PV = $8.62 J Suppose you are considering buying a stock. You expect the stock to pay a dividend of $3 one year from today, $3.50 two years from today, and then dividend will grow 2% each year after that. Using the CAPM, you estimate your required return at 9% to compensate you for the risk of this stock's cash flows. What is the maximum price you are willing to pay for a share of the stock? LOS Type: Multiple Choice Points Awarded: 0.000/1.000 User Answers): $40.21 Rationale: Feedback Section 8.3. Valuing Stock: The Dividend Discount Model; Example 8.3.3. Find the intrinsic value of a stock with variable dividends PV=PV (Dividend 1 through 2) + PV (Dividend 3 through ∞) = $3.50 +( 1.09 1.00 PV 6.6982 42.03 PV $18.62
Q 6. Suppose Company X has a stock that delivers cash flows every year. The amount of the first cash flow is $A and since then will rise by B% each year forever. The opportunity cost of capital is estimated at C%. a) If the first cash flow comes in year 1, what is the present value of this series of cash flows? b) If the first cash flow comes in year 4, what is the present value of this series of cash flows? c) If the first cash flow comes today, what is the present value of this series of cash flows? $ 2,970.00 7.00% 11.00% A B с
1. Problem 9.02 (Constant Growth Valuation) Tresnan Brothers is expected to pay a \$3.30 per share dividend at the end of the year(1.e.D1=53.20). The dividend is expected to grow at a constant rate of 94 a year. The required rate of tetura on the stock,fmis16%. What is the stock's current value per share? Round vour answer to the nearest cent.
Q 19) Beangrinder Corp. has an expected rate of return on equity next year (ROE1) equal to 12% and a reinvestment rate next year (RIR1), equal to 50%. Beangrinder Corp.'s equity beta is equal to 1 and the company is expected to have an earnings per share next year (EPS1), equal to $3. The long-run risk-free rate is equal to 1% while the stock market risk premium is forecast to equal 7%. What is Beangrinder Corp.'s intrinsic equity value per share equal to: Options - $100 $25 $50 $75
11. A company just paid a dividend of $4 and anticipates increasing its dividend at a constant rate of 5% per year, indefinitely. The current price of the Bond is $30. Use the Gordon Growth Model to calculate the required rate of return, k. Value Do (1+g k-g D1 k-g
Please explain answer
Q14: Suppose a company is expected to pay a dividend of $2.30 per share next year. Assuming the dividend growth rate is 5% a year and the market requires a return of 12%, how much should the stock be selling for?
ff2
7. I need help with finance home work question asap please A company just paid a dividend of $4.15 per share. The company is expected to increase its dividend by 19% per year for each of the next 2 years and then maintain a constant dividend growth rate of 5% forever. What is this stock's expected price per share 2 years from now if the required return on this stock is 13.45%?

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