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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(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.)
Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 10 percent. Safeco’s recent dividend was $1.55.What is the value of Safeco stock when the required return is 12 percent? (Round your answer to 2 decimal places.)
None
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.)
Current price of Company X's stock is $100. The table below gives the data on end of the year prices and probabilities dependent on the state of the economy. Calculate the expected return for the stock. (E) Economy Probability End of the year price Growth .5 $130 Recession .5 $90 O a. 25% b. 10% O c. 15% O d. 20%
Note: Please answer this question only by typing your answers in the typing space available for this question Assume that the annual rates of return for two stocks (Reliance and Wipro) for the past 5 years are as given below: Year 2 3 4 5 Reliance 35% 11% -7% -12% 24% Wipro 28% 7% -11% 15% -5% Based on the above information answer the following questions: (a) Compute the arithmetic mean of the annual rate of return for each stock. Which stock is preferable by this measure? (b) Compute the geometric mean of the annual rate of return for each stock. Which stock is preferable by this measure? (c) Compute the standard deviation of the annual rate of return for each stock. Which stock is preferable by this measure?
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. %
Find the real rate of return for the Costco stock you purchased for $166.80 five years ago, that has a current price of $382.23, and dividends of $7/per share. The inflation rate is 9.44%. (round to TWO decimal places){WRITE YOUR ANSWER AS A PERCENTAGE…FOR EXAMPLE, WRITE 12.56 FOR 12.56% AND NOT .12563}.
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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