Select the bestQuestion 24Reddick Enterprises' stock currently sells for $35.50 per share. The dividend is projected to increase at a constant rate of 5.50%per year. The required rate of return on the stock (I/Yr) is 9.00%. What is the stock's expected dividend in 3 years (Div3)?O 146O 224O 1.76O 2.00O 1.24

The Dividend discount model refers to a model that is based on the theory that the current price of…

Answered: Select the best Question 24 Reddick…

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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Question 1 The firm is expected to pay a dividend of $0.50 forever starting from the third year. If the required return is 10 percent, what is this stock worth today? O4.13 3.42 O 3.76
If the dividend yield for year 1 is expected to be 7% based on a stock price of $30, what will the year 5 dividend be if dividends grow annually at a constant rate of 8% (in $ dollars)? $ A Moving to another question will save this response. Question 17 of 30 Esc DII F5 F1 F2 F3 F4 F6 2$ 4 23
1. If your stock portfolio is currently valued at $57,000, what will it be worth in 18 years assuming you make 9% per year and no further contributions are made? 2. a. $199,342 b. $129,564 c. $268,875 d. $57,000
Q5
10
Question 3 Kempinski Ltd. has just paid a cash dividend of $2 per share. The market forecasts that the dividend payments of the company will grow at 20% per year for the next three years, 15% for the following year and then settle down to 10% per year afterwards. Given the risk-free rate is 4%, the market risk premium is 10% and Kempinski's stock has a beta of 1.2. (a) What is the required return for Kempinski based on CAPM? (b) Calculate the (intrinsic) value of Kempinski stock at time 0. (c) Given the expected dividend growth path (as forecasted above), is Kempinski's share over- valued or under-valued if it is selling at $100 three years from now? What is the trading signal it implies? 3
2
QUESTION 1 Stock in CDB Industries has a beta of 1.12. The market risk premium is 7.2 fercent, and T-bills are currently yielding 4.2 percent. CDB's most recent dividend was $3.60 per share, and dividends are expected to grow at a 5.2 percent annual rate indefinitely. Required: If the stock sells for $58 per share, what is your best estimate of CDB's cost of equity? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).) cost of equity: %
QUESTION 4 What is the expected annual return for a stock that is priced at $64.78, is expected to pay a dividend of $2.00 every quarter forever, and is expected to pay its next dividend in 3 months? O 12.35% (plus or minus 2 bps) O3.09% (plus or minus 2 bps) O 12.93% (plus or minus 2 bps) O6.17% (plus or minus 2 bps) O the answer cannot be obtained based on the given information
H the expected dividend on a share of stock is $1 next year thedividends are expected to grow at a 5% rate per annum indefinitelyand ihe siock currently selling for $14.29 what is the approximateTerum required by the stockholders?a. 21% pa b. 12% pa C. 12% pa
Question 3 The firm is expected to pay a dividend of $0.50 forever starting from the fourth year. If the required return is 10 percent, what is this stock worth today? 4.13 3.76 O 3.42
PV = $8.62 J Suppose you are considering buying a stock. You expect the stock to pay a dividend of $3 one year from today, $3.50 two years from today, and then dividend will grow 2% each year after that. Using the CAPM, you estimate your required return at 9% to compensate you for the risk of this stock's cash flows. What is the maximum price you are willing to pay for a share of the stock? LOS Type: Multiple Choice Points Awarded: 0.000/1.000 User Answers): $40.21 Rationale: Feedback Section 8.3. Valuing Stock: The Dividend Discount Model; Example 8.3.3. Find the intrinsic value of a stock with variable dividends PV=PV (Dividend 1 through 2) + PV (Dividend 3 through ∞) = $3.50 +( 1.09 1.00 PV 6.6982 42.03 PV $18.62

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