Melissa Cutt is thinking about buying some shares of EZLawn Equipment, at $47.67 per share. She expects the price of the stock to rise to $57.84 over the next 3 years. During that time she also expects to receive annual dividends of $4.93 per share. a. What is the intrinsic worth of this stock, given a required rate of return of 11%? b. What is its expected return?

Melissa Cutt is thinking about buying some shares of EZLawn Equipment, at $47.67 per share. She expects the price of the stock to rise to $57.84 over the next 3 years. During that time she also expects to receive annual dividends of $4.93 per share. a. What is the intrinsic worth of this stock, given a required rate of return of 11%? b. What is its expected return?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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LO some shares of Health Diagnostics, $75 a share. She expects the price of the stock to rise to $115 a share over the next three years. During that time, she also expects to receive annual dividends of $4 per share. Assuming that the investor's expectations (about the future price of the stock and the dividends that it pays) hold up, what rate of return can the investor expect to earn on this investment? (Hint: Use either the approximate yield formula or a financial calculator to solve this problem.) LO3,4 3. Calculating expected return on a stock. The price of Outdoor Designs, Inc. is now $85. The company pays no dividends. Fred Gray expects the price four years from now to be $125 a share. Should Fred buy Outdoor Designs if he wants a 15 percent rate of return? Explain. LO3,4 4. Calculating key stock performance metrics. The Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of…
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10. I need help with finance home work question asap please A stock that currently sells for $120 has EPS of $20.75. What is the annual rate of return on this stock if the company is expected to pay a dividend per share in the amount of $18 each year forever?
K Melissa Cutt is thinking about buying some shares of EZLawn Equipment, at $46.30 per share. She expects the price of the stock to rise to $47.65 over the next 3 years. During that time she also expects to receive annual dividends of $6.79 per share. a. What is the intrinsic worth of this stock, given a required rate of return of 12%? b. What is its expected return? BCCCID a. The intrinsic worth of this stock is $ 50.22. (Round to the nearest cent.) b. The expected return is %. (Round to one decimal place.)
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11. I need help with finance home work question asap please A stock that currently sells for $120 has EPS of $20.75. What is the annual rate of return on this stock if the company is expected to pay a dividend per share in the amount of $18 each year forever?
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