Next year, BHH Co. is expected to pay a dividend of $3.12 per share from earnings of $4.98 per share. The equity cost of capital for BHH is 12.3%. What should BHH'sforward P/E ratio be if its dividend growth rate is expected to be 4.2% for the foreseeable future?The forward P/E ratio is(Round to two decimal places.)

Step 1: The calculation of the price earning ratio AB1Expected dividend (D1) $ 3.12 2EPS $…

Answered: Next year, BHH Co. is expected to pay 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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The FI Corporation’s dividends per share are expected to grow indefinitely by 8% per year. Required: If this year’s year-end dividend is $3.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? Note: Round your answer to 2 decimal places. If the expected earnings per share are $9.00, what is the implied value of the ROE on future investment opportunities? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
XYZ is expected to pay 30.06 dividend next year. The dividend is expected to grow at 50% per annum in the 2nd and the 3rd year, at 20% per annum in the 4th and 5th year, and at 5% p.a. thereafter. If the required rate of return is 12 %, what is the value per share?
Suppose the Pale Hose Corp. is expected to pay a dividend next year of OMR2.25 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 20% for the following 2 years and then at 5% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 15%, what is the value of a share of Pale Hose?
The next dividend payment by Savitz, Inc., will be $2.43 per share. The dividendsare anticipated to maintain an annual growth rate of 3.5% forever. If the stockcurrently sells for $70 per share, what is the required return?
Assume XYZ Corp's dividend payment will be $3.12 one year from now, $3.85 two years from now, and $4.12 three years from now. Further assume that after these three years, the dividend will grow by 4.5% each year. If the required rate of return for the industry XYZ Corp. belongs to is 10.7%, what is the market value of XYZ Corp.'s stock under the Dividend Discount Model? O $71.24 Ⓒ$65.45 O $60.19 O $55.72
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Universal Forest’s current stock price is $64.00 and it is likely to pay a $0.47 dividend next year. Since analysts estimate Universal Forest will have a growth rate of 13.6 percent, what is its required return? (Round your answer to 2 decimal places.)
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