Ms. Manners Catering (MMC) has paid a constant $1.50 per sharedividend to its common stockholders for the past 25 years. MMCexpects to continue this policy for the next two years, and then bealinto increase the dividend at a constant rate equal to 2 percent peryear into perpetuity. Investors require a 12 percent rate of return topurchase MMC's common stock What is the market value of MMC'scommon stock$1473$1500$11.54$1530

given, r=12% g=2% dividend = $1.50 for two years D1=D2=$1.5

Answered: Ms. Manners Catering (MMC) has paid 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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Nofal Corporation will pay a $4.10 per share dividend next year. The company pledges to increase its dividend by 6 percent per year, indefinitely. Required: If you require a return of 10 percent on your investment, how much will you pay for the company’s stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Keidis Industries will pay a dividend of $4.15, $5.25, and $6.45 per share for each of the next three years, respectively. In four years, you believe that the company will be acquired for $59.00 per share. The return on similar stocks is 11.7 percent. What is the current stock price?
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Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.70 dividend every year, in perpetuity. If this issue currently sells for $80.45 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return %
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The Sly Fox pays a constant dividend of $1.46 a share. The company announced today that it willcontinue to pay the dividend for another two years and then in year 3 it will pay a final liquidatingdividend of $15.25 a share. What is one share of this stock worth today at a required return of 18.5%?Select one:a. $11.44b. $12.92c. $14.20d. $13.09e. $12.07
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To purchase shares of Paylocity Inc. (ticker symbol: PCTY), Steven Beauchamp requires a return of 8.50%. Paylocity, which just paid an annual dividend of $1.50 per share, expects to grow its annual dividend by 22% per year for the next 4 years. A 5% constant growth rate is subsequently expected. How much will Mr. Beauchamp pay today for one share of Paylocity? a. $62.36 b. $80.05 c. $67.26 d. $78.22 e. $71.25

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