Problem 11IntroA stock just paid an annual dividend of $7.7. The dividend is expected to grow by 3% peryear for the next 4 years. In 4 years, the P/E ratio is expected to be 16 and the payout ratioto be 60%.The required rate of return is 8%.Part 1What is the intrinsic value of the stock?0+ decimalsSubmit

ParticularsValuesAnnual dividend$7.70Required rate of return8%Growth rate3%Expected P/E…

Answered: Problem 11 Intro A stock just paid an…

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

See similar textbooks

Similar questions

Yogesh
K 1. eBook Problem 9-07 You are analyzing the U.S. equity market based upon the S&P Industrials Index and using the present value of free cash flow to equity technique. Your inputs are as follows: Beginning FCFE: $60 k = 0.11 Growth Rate: Year 1–3: 11% 4–6: 9% 7 and beyond 7% Assuming that the current value for the S&P Industrials Index is 1,100, would you underweight, overweight, or market weight the U.S. equity market? Do not round intermediate calculations. Round your answer to the nearest cent. You should -Select- the U.S. equity market as the estimated value of the stock of $ is -Select- the S&P Industrials Index. Assume that there is a 1 percent increase in the rate of inflation — what would be the market’s value, and how would you weight the U.S. market? Assume that the required return would increase from 11% to 12%, decreasing the value. Also assume that the nominal cash flow growth rates would increase for all time periods by one percentage point. Do not round…
Problem 10-1 Calculating Returns [LO 1] Suppose a stock had an initial price of $93 per share, paid a dividend of $1.90 per share during the year, and had an ending share price of $111. a. Compute the percentage total return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the dividend yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What was the capital gains yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Percentage total return % b. Dividend yield % Capital gains yield % с.
# 26 O A stock just paid a dividend of $2.42. The dividend is expected to grow at 28.06% for three years and then grow at 4.13% thereafter. The required return on the stock is 12.04%. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not_submitted Attempts Remaining: Infinity
Question 7 DFG common stock is expected to have extraordinary growth of 20% per year for two years, at which time the growth rate will settle into a constant 6%. If the discount rate is 15% and the most recent dividend was $2.50, what should be the current share price? (a) $31.16 (b) $33.23 (c) $37.39 (d) $47.77
Plz help no time pl
Problem 9-3 Stock Values The next dividend payment by Im, Incorporated, will be $1.64 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. The stock currently sells for $31 per share. a. What is the dividend yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the expected capital gains yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Dividend yield b. Capital gains yield % %
Chapter 8 Question 6 Input area: Stock price Required return Output area: Dividend yield Next year's dividend Current dividend $ 78.00 10.9%
9
eBook Problem 11-08 Two stocks each currently pay a dividend of $2.20 per share. It is anticipated that both firms’ dividends will grow annually at the rate of 5 percent. Firm A has a beta coefficient of 1.05 while the beta coefficient of firm B is 1.25. If U.S. Treasury bills currently yield 3.4 percent and you expect the market to increase at an annual rate of 8.6 percent, what are the valuations of these two stocks using the dividend-growth model? Do not round intermediate calculations. Round your answers to two decimal places. Stock A: $ Stock B: $ Why are your valuations different? The beta coefficient of is higher, which indicates the stock's return is volatile. If stock A’s price were $54 and stock B’s price were $43, what would you do? Stock A is and be purchased. Stock B is and be purchased.
15
Problem 11 Intro Assume that the CAPM holds. One stock has an expected return of 9% and a beta of 0.5. Another stock has an expected return of 13% and a beta of 1.5. Part 1 What is the expected return on the market? 3+ decimals Submit

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS