Matilda Industries pays a dividend of $2.50 per share and is expected to pay this amount indefinitely. If Matilda's equity cost of capital is 13%, which of the following would be expected to be closest to Matilda's stock price?

Matilda Industries pays a dividend of $2.50 per share and is expected to pay this amount indefinitely. If Matilda's equity cost of capital is 13%, which of the following would be expected to be closest to Matilda's stock price?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

See similar textbooks

Related questions

Q: NoGrowth Corporation currently pays a dividend of $2.08 per year, and it will continue to pay this…

A: Cost of Equity: It is the cost of the company while raising finance by issuing equity. It is…

Q: Nogrowth Corporation currently pays a dividend of $0.43 per quarter, and it will continue to pay…

A: A share price refers to the stock price that is traded in the share market. Investors can evaluate…

Q: Bates, Inc. pays a dividend of $1.00 and is currently selling for $32.50. If investors require a 12%…

A: Calculation of growth rate: Answer: Growth rate is 8.66%

Q: Summit Systems will pay a dividend of $1.48 this year. If you expect Summit's dividend to grow by…

A: Expected dividend (D1) = $1.48 Growth rate (g) = 5.3% Cost of capital (r) = 10.7%

Q: NoGrowth Corporation currently pays a dividend of $0.44 per quarter, and it will continue to pay…

A: Annual dividend (D) = $0.44 Cost of capital (r) = 15.5%

Q: NoGrowth Corporation currently pays a dividend of $0.56 per quarter, and it will continue to pay…

A: Given: Dividend = $0.56 Equity cost of capital = 13.6%

Q: A firm has determined its optimal capital structure which is composed of the following sources.…

A: Price of preferred stock (P0) = RM 75 Preferred dividend (D) = RM 10 Cost of issuing and selling…

Q: NoGrowth Corporation currently pays a dividend of $0.52 per quarter, and it will continue to pay…

A: A share price refers to the stock price that is traded on the share market. Investors can evaluate…

Q: HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1, and its…

A: As per the dividend growth model expected share price can be calculated using the formula given…

Q: Krell Industries has a share price of $21.88 today. If Krell is expected to pay a dividend of…

A: The stock price which is the maximum price to be paid for share consists of dividends and terminal…

Q: Krell Industries has a share price of $21.52 today. If Krell is expected to pay a dividend of $0.67…

A: Current stock price (P0) = $21.52 Expected next dividend (D1) = $0.67 Stock price at the end of…

Q: Anle Corporation has a current price of $29, is expected to pay a dividend of $1 in one year, and…

A: The return on an investment consists of (1) dividend / interest and (2) capital gain / loss. The…

Q: Waterworks has a dividend yield of 5.87 percent. If its capital gain yield is expected to be 4.88…

A: Expected return The least return that investors expect from the investments they made in order to…

Q: NoGrowth Corporation currently pays a dividend of $0.41 per quarter, and it will continue to pay…

A: According to Gordon Model, if there is no growth then P0 = D/Ke Where, P0 = Current Stock Price…

Q: Krell Industries has a share price of $22.53 today. If Krell is expected to pay a dividend of $0.92…

A: According to the values provided in the question: p0=$22.53d1=$0.92p1=$24.43

Q: what price wouldOwenInc's stock be expected to sell for immediately after it pays the dividend?

A: Dividend discounted models (DDM) are quantitative models that helps in determining the current stock…

Q: HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1.03, and…

A: The objective of the question is to calculate the cost of equity capital for HighGrowth Company. The…

Q: Anle's Corporation has a current price of $12, is expected to pay a dividend of $1 in one year, and…

A: Dividend yield can be calculated by using formula below.Dividend yield = Dividend/ current stock…

Q: NoGrowth Corporation currently pays a dividend of $0.59 per quarter, and it will continue to pay…

A: Solution:- Cost of equity means the rate of return on investment required by the equity…

Q: NoGrowth Corporation currently pays a dividend of $0.42 per quarter, and it will continue to pay…

A: A share price refers to the stock price that is traded in the share market. Investors can evaluate…

Q: NoGrowth Corporation currently pays a dividend of $0.45 per quarter, and it will continue to pay…

A: According to Gordon Model, if there is no growth then P0 = D/Ke Where, P0 = Current Stock Price…

Q: what is Krell’s dividend yield and equity cost of capital?

A: Information Provided: Current price = $22 Dividend = $0.88 Expected stock price = $23.54

Q: ll Metals, Inc. has a current stock price of $35 share, is expected to pay a dividend of $1.20 in…

Q: NoGrowth Corporation currently pays a dividend of $0.49 per quarter, and it will continue to pay…

A: As per dividend discount model, the current stock price is

Q: Anle Corporation has a current price of $16, is expected to pay a dividend of $1 in one year, and…

A: Expected dividend yield is calculated below:Expected dividend yield = Dividend/ Current stock price…

Q: Matilda Industries pays a dividend of $2.15 per share and is expected to pay this amount…

A: The value of the stock can be calculated by dividing cost of capital from the dividends per share if…

Q: Krell Industries has a share price of $22.35 today. If Krell is expected to pay a dividend of $0.84…

A: The equity cost of capital is the cost of acquiring a stake in a corporation. It is the return you…

Q: NoGrowth Corporation currently pays a dividend of $0.54 per quarter, and it will continue to pay…

A: No growth stock means that the dividend payout amount remains the same forever. In this case, the…

Q: What is the price per share of NoGrowth stock if the firm's equity cost of capital is 17.49% ?

A: The dividend growth model is a method for estimating the value of a company's stock based on the…

Q: Anle Corporation has a current price of $13, is expected to pay a dividend of $2 in one year, and…

A: Answer: 1. Calculation of Anle's expected dividend yield: Formula, Expected dividend yield =…

Q: HighGrowth Company has a stock price of $18. The firm will pay a dividend next year of $1.15, and…

A: Stock price (P0) = $18 Next dividend (D1) = $1.15 Growth rate (g) = 3.5%

Q: Anle Corporation has a current price of $20, is expected to pay a dividend of $1 in one year, and…

A: Expected dividend yield is calculated below:

Q: Krell Industries has a share price of $22.79 today. If Krell is expected to pay a dividend of 1.19%…

A: Current stock price = $22.79 Dividend rate = 1.19% Growth rate = 23.33%

Question

Matilda Industries pays a dividend of $2.50 per share and is
expected to pay this amount indefinitely. If Matilda's equity
cost of capital is 13%, which of the following would be
expected to be closest to Matilda's stock price?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction to Question :

VIEW

Step 2: Calculation of Stock price:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Matilda Industries pays a dividend of $2.50 per share and is expected to pay this amount indefinitely. If Matilda's equity cost of capital is 12%, which of the following would be expected to be closest to Matilda's stock price? A. $12.50 B. $16.66 C. $20.83 D. $26.04
Anle Corporation has a current stock price of 21.36 and is expected to pay a dividend of $1.15 in one year. Its expected stock price right after paying that dividend is $23.13. What is Anle's equity cost of capital? How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? What is Anle's equity cost of capital? (Round to two decimal places.)
Anle Corporation has a current stock price of $21.99 and is expected to pay a dividend of $1.00 in one year. Its expected stock price right after paying that dividend is $23.92. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is ☐ %. (Round to two decimal places.)
Anle Corporation has a current stock price of $15.42 and is expected to pay a dividend of $0.85 in one year. Its expected stock price right after paying that dividend is $17.47. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? GELEID a. What is Anle's equity cost of capital? Anle's equity cost of capital is% (Round to two decimal places)
Anle Corporation has a current stock price of $21.38 and is expected to pay a dividend of $1.00 in one year. Its expected stock price right after paying that dividend is $23.19. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is%. (Round to two decimal places.) LEED
Anle Corporation has a current stock price of $19.71 and is expected to pay a dividend of $0.95 in one year. Its expected stock price right after paying that dividend is $21.84. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is %. (Round to two decimal places.) b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? The dividend yield is%. (Round to two decimal places.) The capital gain is%. (Round to two decimal places.)
NoGrowth Corporation currently pays a dividend of $0.45 per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital is 17.49% ?
Nogrowth Corporation currently pays a dividend of $0.43 per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital 11.48%? The stock price is $____ (Round to the nearest cent.)
NoGrowth Corporation currently pays a dividend of $0.42 per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital is 19.2%? The stock price is $ (Round to the nearest cent.)
Anle Corporation has a current stock price of $19.49 and is expected to pay a dividend of $1.25 in one year. Its expected stock price right after paying that dividend is $21.26. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain?
NoGrowth Corporation currently pays a dividend of $0.44 per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital is 15.5%? The stock price is $______ (Round to the nearest cent.)
Red, Inc., Yellow Corp., and BlueCompany each will pay a dividend of $2.35 next year. The growth rate in dividendsfor all three companies is 5 percent. The required return for each company’s stockis 8 percent, 11 percent, and 14 percent, respectively. What is the stock price foreach company? What do you conclude about the relationship between the requiredreturn and the stock price?