None Givens, Inc., is a fast-growing technology company that paid a $1.25 dividend last week.The company's expected dividend growth rates over the next four years are as follows: 23percent, 35 percent 37 percent, and 30 percent. The company then expects to settle downto a constant-growth rate of 9 percent annually. If the required rate of return is 12percent, what is the present value of the dividends? (Do not round intermediatecalculations. Round final answer to two decimal places.)$87.37O $110.10O $91.23O $83.61

• Dividend at t0= (D0) =$1.25• Growth rate in Year 1=23%• Growth rate in Year 1=35%• Growth rate in…

Answered: Givens, Inc., is a fast-growing…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 21P

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Givens, Inc., is a fast-growing technology company that paid a $1.25 dividend last week. The company's expected dividend growth rates over the next four years are as follows: 23 percent, 35 percent 37 percent, and 30 percent. The company then expects to settle down to a constant-growth rate of 9 percent annually. If the required rate of return is 12 percent, what is the present value of the dividends? (Do not round intermediate calculations. Round final answer to two decimal places $83.61 $91.23 $87.37
Trend-Line Incorporated has been growing at a rate of 7% per year and is expected to continue to do so indefinitely. The next dividend is expected to be $6 per share. If the market expects a 12% rate of return on Trend-Line, at what price must it be selling? If Trend-Line’s earnings per share will be $9 next year, what part of its value is due to assets in place? If Trend-Line’s earnings per share will be $9 next year, what part of its value is due to growth opportunities?
Show Detailed Steps When Solving The Following Question: Gordon Growth Company is expected to pay a dividend of $4 next period, and dividends are expected to grow at 6% per year. The required return is 16%. What is the current price? What is the price expected to be in year 4?
Banco Tech is an early stage financial technology firm. Earnings this year where $20 per share and are expected to grow at 20% per year for the next three years. Banco does not plan to pay a dividend until three years time, when the payout ratio will be 43%. Dividends are expected to grow at 6% thereafter. The required rate of return is 9%. Calculated intrinsic value.
Revarop, Inc., is a fast-growth company that is expected to grow at a rate of 23 percent for the next four years. It is then expected to grow at a constant rate of 6 percent. Revarop’s first dividend, of $4.25, will be paid in year 3. If the required rate of return is 17 percent, what is the current value of the stock if dividends are expected to grow at the same rate as the company? (Non-Constant Growth) Provide solution using formula and stating the steps using financial calculator
The Data General Company is expected to pay an annual dividend of $2.53 at the end of the year. Their growth rate is 8% annually. You find that their stock is currently trading at $35.00. What must be their required rate of return?
Company A is a worldwide delivery company that is expected to generate a dividend (per share) of $1.40 one year from now (i.e. at t=1). You are expecting that on average Company A's dividends will grow at 5% each year after that into the indefinite future. Assume for simplicity that all dividends are paid at the end of each year. Suppose that the appropriate discount rate for these dividends is 10%. a. What is the current stock price for Company A? Assume that any dividend at t=0 has already been paid out. b. What do you expect the stock price of Company A to be next year (i.e. at t=1) immediately after the dividend has been paid out? c. What is the expected return for holding the stock of Company A over the year ahead? Hint: Find the IRR on the expected cash flows from buying and holding the stock for one year. The cash flows should include the purchase and sale of the stock as well as the dividend you will receive
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price?
Universal Exports is expected to pay the following dividends over the next four years: $8, $4, $2, and $2. Afterwards the company is expected to maintain a constant 4 percent growth rate in dividends. If the required return is 15 percent, what is the maximum that you would be willing to pay for a stock of Universal today?
Starkiller Base Inc. expects to have a changing dividend policy over the next few years starting with the dividend that they just paid of $4.17. In the following year their dividend will grow by 24.3% and in the year after by 18.4%. Following that they expect their dividends to continue growing at a constant rate of 4.4% forever. If the required rate of return for Starkiller Base is 11.6% per year, what is the price today of their shares?
Zapata Corporation will pay dividends of USD 5.00, USD 6.00, and USD 7.00 in the next three years. Thereafter, the company expects its dividend growth rate to be a constant 10 percent. If the required rate of return is 15 percent, what is the current market price of Zapata stock?
Could I Industries just paid a dividend of $1.10 per share. The dividends are expected to grow at a rate of 20 percent for the next six years and then level off to a growth rate of 4 percent indefinitely. If the required return is 12 percent, what is the value of the stock today?

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