Share B is not expected to pay a dividend in the next five years. Starting from year 6, it is expected to pay a constant dividend of $2.50 per year. What is the value of Share B if your required return is 8% per year.
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- How much would you be prepared to pay for a share in 2 years’ time that pays a $1.5 dividend each year constantly ? Assume the required rate of return is expected to remain constant at 9.1% per year.A stock will pay a dividend next quarter of $1.00. If the expected return is 10% per year, compounded annually, what is the price of the stock? Suppose a stock will pay $0 for the next 4 years, and then pay $1 every quarter after that. The required return is 10% per year, compounded annually. What is the price of the stock? Suppose a stock will pay $0.50, $1.00, $1.50, $2.00 and then grow at 4% per year compounded quarterly. The required return is 10% per year compounded annually. What is the price of the stock?What would be the price of a stock that pays an annual fixed dividend of $1.2 for ten years, and then the dividend payment increases by 1% every year, and the required rate of return is 5% annually?
- What is the current value of a share of McDonalds if its current dividend is $1.50 and dividends are expected to grow at an annual rate of 20 percent for the next 5 years? Assume the investor has a required rate of return of 15 percent and expects to sell the security in 5 years for $72.A share is expected to pay an annual dividend of $1.93 next year, and this dividend is then expected to grow at a constant rate of 3% p.a. in perpetuity. If the required rate of return is 8% p.a., what is the value of the share?Compute the price of a share of stock that pays a 2 per year dividend and that you expect to be able to sell in one year for 25, assuming you require a 10% return.
- You own a stock that will start paying $0.50 annually at the end of the year. It will then grow each year at a constant annual rate of 5%. If the required rate of return is 14%, what should you pay per share?You are considering purchasing stock in a company that is expected to pay a $ 3.34 dividend later this year and you require a return of 7.79%. Assume the dividend will continue to be paid each year thereafter and will grow every year as described below. C What is the maximum price you would be willing to pay if you expect a growth rate of 2%? $ 58.84 (Enter as a whole number with two decimal places, such as 10.19.) What is the maximum price you would be willing to pay if you expect a growth rate of 5%? $ 125.70 What is the maximum price you would be willing to pay if you expect a growth rate of 7%? $452.38 What is the relationship between the price of a stock and the firm's growth rate? O A. The stock price is exactly equal to the growth rate times the dividend. B. As the growth rate investors expect increases, the price they are willing to pay also increases. OC. As the growth rate investors expect increases, the price they are willing to pay decreases. O D. There is no relationship.Suppose TB Pirates, Inc. is expected to pay a $2dividend in one year. If the dividend is expected togrow at 5% per year and the required return is 20%,what is the price?
- Suppose you have desired to hold the stock for 5years and sale it thereafter. Dividend is expected to be 100 per year. The stock is expected to be sold at 1,000 after 5 years. How much maximum price do you pay today if the required rate of return is 10%. A. 1030 B. 1245 C. 379 D. 10002.Your expected income will grow at 6% per year for the next five years. After that your incomegrowth is expected to slow to 3% per year and continue at that level forever. Your currentincome is AED 500,000. What is the present value of all future earnings if the interestrate is 8%? (Assume all cash flows occur at the end of the year.)Five Star Corporation will pay a dividend of $4.15 per share next year. The company pledges to increase its dividend by 6.25 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company’s stock today?