KCommon stock value-Constant growth Use the constant-growth model (Gordon growth model) to find the value of the firm shown in the following table: (Click on the icon herein order tocopy the contents of the data table below into a spreadsheet.)Dividend expected nextyear$1.53Dividend growth rate6.6%Required return11.7%The value of the firm's stock is $(Round to the nearest cent.)

Value of stock with constant growth is = (Dividend expected in next year/(Requried return - Growth…

Answered: K Common stock value-Constant growth…

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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Problem 1: Nachman Industries just paid a dividend of Do = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?
6. Constant growth stocks Super Carpeting Inc. just paid a dividend (Do) of $1.92, and its dividend is expected to grow at a constant rate (g) of 2.80% per year. If the required return (rs) on Super's stock is 7.00%, then the intrinsic, or theoretical market, value of Super's shares is Which of the following statements is true about the constant growth model? The constant growth model implies that dividends remain constant from now to a certain terminal year. The constant growth model implies that dividend growth remains constant from now to infinity. Use the constant growth model to calculate the appropriate values to complete the following ● ements about Super Carpeting Inc.: • If Super's stock is in equilibrium, the current expected dividend yield on the stock will be Super's expected stock price one year from today will be per share. • If Super's stock is in equilibrium, the current expected capital gains yield on Super's stock will be per share. per share. per share.
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.
What is the multi-stage DDM applied price of a stock that is expected to begin paying a $3 dividend 6 years from now. The firm is expected to grow dividends by 15% per year for the next four years after that, followed by a constant growth rate of 4% thereafter forever. Assume that investors require a rate of return of 16% for this firm's common shares. O $11.23 O $16.36 O $25.75 O $18.75
Expected Return of Common Stock Wooster Inc. has common stock with a market price of $120 per share. We expect the next dividend to be $9 and the constant growth rate to be 4% Calculate the following: Expected return (Total yield) Dividend yield Capital gain or loss yield b.
Question 3XYZ company has just paid a dividend of $1.15. The required rate of return on the stock is 13.4%, and investors expect the dividend to grow at a constant 8% in the future.a) Calculate the current stock value using the Gordon Constant growth model. b) Evaluate Gordons growth model and explain its limitations and why in certain situations the growth model used in part (a) will create incorrect results?
Example: Stock Valuation Consider the following information for the company Fledgling Electronics: Expected earnings per share at the end of year $8.33 Expected dividend per share at the end of year $5 Market capitalization rate (r) 15% Expected growth rate dividends (per year) 10% 1. Calculate the current price per share of Fledgling Electronics 2. Calculate the capitalized value of Fledgling's EPS if it had a no growth policy 3. Calculate the present value of Fledgling's growth opportunities
Two growth model Determine the intrinsic value of an equity share, given the following data: Last dividend (Do) - Rs 2.00 Growth rate for the next five years - 15 percent Growth rate beyond 5 years - 10 percent Assume a required rate of return
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.10. It expects to grow at a constant rate of 3% per year. If investors require a 12% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent.? $ per share Zero Growth Stocks: The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected to remain constant over time. In this situation, the equation is (see attached image):
I. Common Stock Value- Constant Growth Let's Go Corporation, common stock paid a dividend of P12.50 per share last year. The company expects earnings and dividends to grow at 6% per year for the foreseeable future yea a. What is the value of the stock if the required rate of return is 12.5% per year. b. What is the required rate of return for this stock would result in a price per share of P250. =
Calculate today's stock price, based on the following information: Growth rate of dividends years 1 and 2 = 20% Growth rate of dividends years 3 and 4 = 15% Growth rate of dividends year 5 moving forward = 5% Last dividend paid = $1.00 Required rate of return based on the riskiness of this stock = 12% (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Do not input a c Numeric Response
Answer in excel format and explain formulas used.

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