Kellogg Co. (K) recently earned a profit of $412 earnings per share and has a P/E ratio of 20.30. The dividend has been growing at a 4percent rate over the past few years.If this growth rate continues, what would be the stock price in four years if the P/E ratio remained unchanged? What would the price beif the P/E ratio declined to 16 in four years? (Round your answers to 2 decimal places.)Stock priceStock price with new P/ES97.84

P/E ratio is the price to earnings ratio.This ratio is computed by dividing the price per share by…

Answered: Kellogg Co. (K) recently earned a…

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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eBook Carnes Cosmetics Co.'s stock price is $39, and it recently paid a $2.00 dividend. This dividend is expected to grow by 15% for the next 3 years, then grow forever at a constant rate, g; and rs = 14%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places. %
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(Related to Checkpoint 10.1) (Common stock valuation) Header Motor, Inc., paid a $3.52 dividend last year. At a constant growth rate of 6 percent, what is the value of the common stock if the investors require a 15 percent rate of return? Question content area bottom Part 1 The value of the common stock is $enter your response here. (Round to the nearest cent.)
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Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 46. IBIS Corporation has had dividends grow from $2.50 per share to $6.85 per share over the last 10 years (the$6.85 per share dividend was paid yesterday; that is, D0 = $6.85). This compounded annual growth rate individends is expected to continue into the future forever. If the current market price of IBIS’s stock is $54.00per share, what rate of return do investors expect to receive from buying IBIS stock? (Record your answerrounded to 1 decimal place; for example, record 18.29654% as 18.3).47. Jazper, Inc. just paid a dividend of $4.12 per share (that is, D0 = 4.12). If the growth rate in Jazper’s dividendsis expected to shrink every year (forever) by 8 percent (that is, g = -8.0% = -.08) and if Jazper’s required rateof return on equity is 26.2%, what is the current equilibrium price of Jazper’s stock?
Financial analysts forecast Safeco Corp.'s (SAF) growth rate for the future to be 10 percent. Safeco's recent dividend was $1.4 What is the value of Safeco stock when the required return is 12 percent? ( Round your answer to 2 decimal places.)
Carnes Cosmetics Co.'s stock price is $40, and it recently paid a $1.00 dividend. This dividend is expected to grow by 19% for the next 3 years, then grow forever at a constant rate, g; and rs = 16%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places. %
A bond with a $1,000 par value and a contract or coupon interest rate of 11%. A new issue would have a floatation cost of 6% of the $1,125 market value. The bonds mature in 7 years. The firm's average tax rate is 30%, and its marginal tax rate is 23%. What is the fırm's after-tax cost of the bond? 9.83% 8.55% 7.57% 6.58%
Carnes Cosmetics Co.'s stock price is $59, and it recently paid a $1.25 dividend. This dividend is expected to grow by 27% for the next 3 years, then grow forever at a constant rate, g; and rs = 11%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places. %
Q23 A firm recently paid a $0.45 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $80.If the required return for this stock is 13.5 percent, what is its current value? (Do not round intermediate calculations. Round your answer to 2 decimal places.) CURRENT VALUE---
Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $1.70 and it expects dividends to grow at a constant rate gL = 5%. The firm's current common stock price, P0, is $23.60. If it needs to issue new common stock, the firm will encounter a 5.7% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Round your answer to 2 decimal places. Do not round intermediate calculations. % What is the cost of new common equity? Round your answer to 2 decimal places. Do not round intermediate calculations. %
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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