PB-17 Nonconstant Dividends (LOI)Lohn Corporation is expected to pay the following dividends over the next four years$14 $10 $9, and $5 Atened, the company pledges to maintain a comment 6 percentgrowth rate in dividends foreverthe required return on the stock is 14 percent what is the current share price?Mule Cha5442968.2410020$45.70$73.42

Variables in the question:DividendD1=$14D2=$10D3=$9D4=$5D5=Constant growth rate of 6% (forever)…

PB-17 Norconstant Dividends (LO) Lohn Corporation is expected to pay the following dividends over the next four years $14 $10 $9, and $5 Atenesid, the company pledges to maintain a consent 6 percent growth rate in dividends forever the required return on the stock is 14 percent what is the current share price? Huple Chace 56482 О мага 10020 $65.70

PB-17 Norconstant Dividends (LO) Lohn Corporation is expected to pay the following dividends over the next four years $14 $10 $9, and $5 Atenesid, the company pledges to maintain a consent 6 percent growth rate in dividends forever the required return on the stock is 14 percent what is the current share price? Huple Chace 56482 О мага 10020 $65.70

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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9
I NTEGRATED QUESTIONS The percentage of capital structure for ZEF Incorporated is provided here: Capital structure Weighted Bond 21% Preferred stock 5% Common stock 74% The firm is in a 25% tax bracket and plans to maintain its capital structure in the future. The firms cost of debt before tax is 13%. The cost of preferred stock is 17%. The common stock market price is RM22.50. The company’s executive anticipates a dividend constant growth rate of 7% and dividend for this year is expected to be RM2.30. To issue the new common stock, company will incur a floatation cost of RM2.50. a) Compute the firm’s weighted average cost of capital (WACC).
Question 10?
Q17 A firm does not pay a dividend. It is expected to pay its first dividend of $0.20 per share in three years. This dividend will grow at 11 percent indefinitely. Use a 12 percent discount rate.Compute the value of this stock. (Round your answer to 2 decimal places.) STOCK VALUE
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Question 10 (2 points) A firm has 1 million shares outstanding. After-tax earnings have been constant at $5 per share. The firm retains 40% of earnings and pays out the rest in dividend. The shareholder's required rate of return is 15%. Calculate the current share price. $50 $20 $30 $10 $40
Q23 A firm recently paid a $0.45 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $80.If the required return for this stock is 13.5 percent, what is its current value? (Do not round intermediate calculations. Round your answer to 2 decimal places.) CURRENT VALUE---
QUESTION 7 Manchester plc is expected to pay annual dividends of £1.50, £1.75 and £2.00 per share at the end of each of the next three years (i.e., from t-1 to t=3). After year 3, annual dividends are expected to grow at a rate of 2% forever. Assuming that shareholders of Manchester plc. require a rate of return equal to 5% per year, what is the fair value for the share of Manchester plc.? O £95.52 £64.70 O £48.37 O £63.48
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Q13 The Engineering Company currently has 100,000 outstanding stocks selling at OMR 100 each. The firm has net profits of OMR 1,000,000 and wants to make new investments of OMR 2,000,000 during the period. The firm is also thinking of declaring a dividend of OMR 5 per share at the end of the current fiscal year. The market price of per stock at the end of the current year is expected to be OMR 120. How many number new stocks to be issued by the firm assume that dividend is declared under MM model? a. 10,000 stocks b. 15,000 stocks c. 20,000 stocks d. 12,500 stocks
Melia Corporation Current share price $4.65 Current dividend $0.10 Required return on equity 6% Net Income $2.7 Mln Total shareholders’ equity $19 Mln Beta 1.15 Ten year Melia bond yield 3.8% Melia’s expected growth rate for the next five years is 18%, dropping to a long term sustainable rate into perpetuity of 4% For Melia, use a form of the dividend discount model to determine the fair value of the share price. Is Melia under or over-valued compared to the market

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