Tattletale News Corporation has been growing at a rate of 10% per year, and you expect this growth rate in earnings anddividends to continue for another 3 years. If the last dividend paid was $11, what will the next dividend be? Note: Donot round intermediate calculations. Round your answer to 2 decimal places. If the discount rate is 25% and the steadygrowth rate after 3 years is 2%, what should the stock price be today? Note: Do not round intermediate calculations.Round your answer to 2 decimal places.

Value of a stock is calculated by adding the present values of a stock's future cash flows such a…

Answered: Tattletale News Corporation has been…

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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Beasley Ball Bearings paid a $4 dividend last year. The dividend is expected to grow at a constant rate of 5 percent over the next four years. The required rate of return is 12 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. e. Compute the current value of the stock. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) f. Use the formula given below to show that it will provide approximately the same answer as part e. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) P0 = D1 Ke − g g. If current EPS were equal to $5.51 and the P/E ratio is 20% higher than the industry average of 10, what would the stock price be? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) h. By what dollar amount is the stock price…
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B1) see pic
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