In one year, a firm will pay a common stock dividend of $6.35. The dividends have been growing at 6% per year.Based on analysts' forecasts, you predict that you will be able to sell your stock for $48 per share after one year. Ifyou require a rate of return of 13 percent on your stock, how much would you be willing to pay now for a share ofthe stock?O $51.27O $45.85O $42.11O $58.54O $48.10

Dividend refers to the amount that the shareholders are entitled to receive as a share from the…

Answered: In one year, a firm will pay a common…

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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A stock you are evaluating just paid an annual dividend of $2.50. Dividends have grown at a constant rate of 1.5 percent over the last 15 years and you expect this to continue, if the required rate of return on the stock is 12 percent, what is its fair present value and if the required rate of return on the stock is 15 percent, what should the fair value be four years from today?
A firm will pay a dividend of $1.05 next year. The dividend is expected to grow at a constant rate of 3.42% forever and the required rate of return is 13.83%. What is the value of the stock?
Kelly Enterprises's stock currently sells for $35.25 per share. The dividend is projected to increase at a constant rate of 4.75% per year. The required rate of return on the stock, r, is 11.50%. What is the stock's expected price 5 years from now? * O $42.26 O $44.46 O $41.20 O $43.34 O $40.17
Suppose you are thinking of purchasing the Luna Co.’s common stock today. If you expect Luna to pay $2.5, $2.625, $2.73, and $2.81 dividends at the end of year one, two, three, and four respectively and you believe that you can sell the stock for $40.97 at the end of year four. If you required return on this investment is 9%, how much will you be willing to pay for the stock today?
A stock just paid an annual dividend of $6.1. The dividend is expected to grow by 3% per year for the next 4 years. In 4 years, the P/E ratio is expected to be 14 and the payout ratio to be 60%. The required rate of return is 8%. What is the value of the stock?
Kiwi Pro’s common stock currently sells for $8.78 per share. The company executives anticipate a growth rate of 4% forever and a dividend of $1.05 next year. What is your expected rate of return if you buy the stock at the current price? answer is 15.96
Whited Inc.'s stock currently sells for $26.25 per share. The dividend is projected to increase at a constant rate of 4.00% per year. The required rate of return on the stock, rs, is 11.50%. What is the stock's expected price 5 years from now? a. $27.30 b. $45.24 c. $29.27 d. $37.69 e. $31.94
Crate stock is expected to pay dividends of $1 per share one year from today, and $1.5 per share in year two, and you estimate the value of the stock at the end of year two will be $17.50. What is the most you would be willing to pay for the stock today, if you plan to sell it in two years and if you require a 10% retum? O $20.21 $16.75 $16.90 O $16.61.
Suppose you are thinking of purchasing the Moore Co.’s common stock today. If you expect Moore to pay $2.5, $2.625, $2.73, and $2.81 dividends at the end of year one, two, three, and four respectively and you believe that you can sell the stock for $40.97 at the end of year four. If you required return on this investment is 9%, how much will you be willing to pay for the stock today?
please help
A stock in your portfolio has just paid a dividend of $0.50. You expect the dividend to grow to $1.00 next year, to $1.50 the year after, and to $2.00 the year after that. Beyond that, you expect the dividend to grow at a rate of 5% forever. If the cost of capital for the stock is 12% per year, what is the value of the stock today? OA. $21.35 OB. $32.40 OC. $30.00 OD. $27.43
XYZ, Inc. has been growing at 10% per year. You believe this rate will continue for 4 more years, and then will increase to 15% per year and remain indefinitely. If the most recent dividend paid was $3 (D0) and the required return is 10%, then what is the value of the stock today? create an excel file

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