The dividend per share was P27 last year while the current market price of the shares is P135. The growth rate of equity is expected to be 8%. 3. How much the current cost of equity?
Q: Which of the following statements is NOT correct?
A: Cost of Equity: It is the minimum return acceptable by the equity investors for investing in the…
Q: A company has stock which costs $42.00 per share and pays a dividend of $2.30 per share this year.…
A: Given information: Price of the stock is $42.00 Dividend paid is $2.30 Cost of equity is 11%
Q: A firm pays a 5.80 dividend at the end of year one (d1), has a stock price of 103, and a constant…
A:
Q: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to…
A: The cost of equity is the return that investors expect on equity investment. Various models such as…
Q: Company Z-prime’s earnings and dividends per share are expected to grow by 4% a year. Its growth…
A: The DDM refers to the theory where the dividends paid by a company are used as indicators for the…
Q: Company Z-prime's earnings and dividends per share are expected to grow by 3% a year. Its growth…
A: Next year dividend = $9Growth rate (Year 1-Year 4) = 3%Next year EPS = $16Market capitalization rate…
Q: The 5-year average P/E ratio for a firm is 20.00. This year 's earning per share is $5.00 and it is…
A: Financial management consists of directing, planning, organizing and controlling of financial…
Q: A stock is selling today for $60 per share. At the end of the year, it pays a dividend of $3 per…
A: The dividend is the interest paid to shareholders on outstanding shares.
Q: The Evanec Company's next expected dividend, D1, is $2.94; its growth rate is 6%; and its common…
A: To apply the constant dividend growth model, 2 requirements have to be fulfilled:(1) The growth rate…
Q: Topstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along…
A: Solution:Dividend Discount Model (DDM) is the equity model which calculates the implied cost of…
Q: The Evanec Company's next expected dividend, D1, is $3.30; its growth rate is 6%; and its common…
A: The cost of Retained Earnings is the required rate of return to the shareholders when a company uses…
Q: Apple Inc. (AAPL) is expected to pay a dividend of $1.59 at the end of the year. AAPL’s dividend…
A: A Stock of an equity share is a capital market security that offers the investor the ownership…
Q: Waterway Mining Inc.'s shares are currently selling for $187. The current dividend is $5.50 and the…
A: Current price of stock is the price which can be paid for purchase of the stock. It is also called…
Q: Company has the following dividend stream. D1 = 3.82 D2 = 4.41 D3 = 5.81 Dividend is…
A: Using Dividend Discount Model
Q: The last paid dividend is $4 for a share of common stock that is currently selling for $50. What is…
A: Equity is the ownership of shares of the corporation by the shareholders of the corporation and…
Q: A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per…
A: Part a: We can determine the values by using the steps below:
Q: Compute the cost. Internal common equity when the current market price of the common stock is $43.…
A: In the given question we need to compute the cost of internal common equity. We can calculate the…
Q: You want to calculate the weighted average cost of capital. The dividend just paid is $2.50/share.…
A: Given the following data,dividend just paid ( D0 ) = 2.5Growth Rate (g) = 5% or 0.05Current stock…
Q: a. Using the DCF approach, what is its cost of common equity? Do not round intermediate…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. Its growth…
A: The Dividend Discount Model (DDM) is a financial valuation approach used to estimate the intrinsic…
Q: For Company ABC, if stock price P0 = $30; dividend paid at the end of period 1 D1 = $3.00; growth…
A: Required rate of return is the return investor expects from the investment made.
Q: The Evanec Company's next expected dividend, D1, is $2.83; its growth rate is 6%; and its common…
A: The cost of capital is the cost of using funds in the business. This may be in the form of equity or…
Q: Just paid a dividend of $3. Long term growth rate is 2.6% per annum. Cost of equity capital os 11.5%…
A: Current Share Price is the amount which is calculated with the help of future benefits from the…
Q: pany Z-prime’s earnings and dividends per share are expected to grow by 3% a year. Its growth will…
A: We will use the dividend discount model approach here.As per the dividend discount model the price…
Q: Company has the following dividend stream. D1 = 1.81 D2 = 3.24 D3 = 4.64 D4 = 5.27…
A: The share price is the sum of the present value of future dividends and the present value of the…
Q: Company Z-prime’s earnings and dividends per share are expected to grow by 4% a year. Its growth…
A: A stock valuation method called the Dividend Discount Model (DDM) determines a company's intrinsic…
Q: If the last dividend paid by Chemical Brothers Inc. was $1.25 and analysts expect these payments to…
A: Price of a stock is the PV of future dividends. We can determine the price of the stock next year…
Q: . HighGrowth Company has a stock price of $19. The firm will pay a dividend next year of $0.88, and…
A: Next dividend (D1) = 0.88 Current price (P0) = $19 Growth rate (G) = 4.1%
Q: Company has the following dividend stream. D1 = 1.15 D2 = 3.77 D3 = 4.39 D4 = 5.73…
A: Under dividend growth model, valuation of common stock is done by assuming that dividends keep…
Q: Estimate the cost of equity if the share price is $50, the nextt annual dividend is expected to be…
A: Cost of Equity is also known as KE. It is that cost which is incurred by the company for financing…
Q: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to…
A: As you have asked question with multiple parts , we will solve the first 3 parts as per the policy…
Q: grow 7% per year. Callahan's common stock currently sells for $29.75 per share; its last dividend…
A: Discounted cash flow method is used to determine the cost of equity by using future cash flows. This…
Q: A company has stock which costs $42.00 per share and pays a dividend of $2.30 per share this year.…
A: The dividend discount model is the model of stock valuation that assumes that the current value of a…
Q: 3D printing Corp paid a dividend yesterday of $1 per share. The dividend is expected to grow at…
A: Current price of stock is the price which can be paid for purchase of the stock. It is also called…
Q: Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations.…
A: As per our protocol we provide solution to the one question only but you have asked multiple…
Q: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to…
A: Cost of equity: It represents the cost of raising equity shares from the investors for the issuer.…
Q: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to…
A: Capital budgeting refers to the process of evaluating and selecting long-term investment projects or…
Q: Krell Industries has a share price of $22.12 today. If Krell is expected to pay a dividend of $0.94…
A: Share price today (P0) = $22.12Next year dividend (D1) = $0.94Next year share price (P1) =…
Q: A company has stock which costs $42.25 per share and pays a dividend of $2.90 per share this year.…
A: We require to calculate the annual growth rate of dividends from the following details: Stock price…
Q: A firm is expected to pay an annual dividend of $2.40 per share next year. The market price of stock…
A: Dividend discount model will be used and applied here.As per the dividend discount model the value…
Q: A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per…
A: The dividend yield is the percentage ratio that tells us about how much dividend a company is paying…
Q: The Evanec Company's next expected dividend, D1, is $3.50; its growth rate is 5%; and its common…
A: Since you have not mentioned the specific question we will just answer the first question in case…
Q: ABC's last dividend paid was $0.4, its required return is 13.3%, its growth rate is 7%, and its…
A: Current Price of Sorenson's stock P0=D0(1+g)r-g=$0.4(1.07)0.133-0.07=0.4280.063=$6.7937
Q: Last year, Big W Company reported earnings per share of $2.50 when its stock was selling for$50.00.…
A: P/E ratio = Current market price of share / Earnings per share.
Q: You forecast the company A’s future earning is going to be $5.34 per share. The current market price…
A: PE ratio ratio measures current price of the company to its earning per share. formula: PE = CURRENT…
The dividend per share was P27 last year while the current market price of the shares is P135. The growth rate of equity is
expected to be 8%.
3. How much the current
Step by step
Solved in 2 steps with 2 images
- The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $28.50 per share; its last dividend was $2.50; and it will pay a $2.70 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % If the firm's beta is 2.0, the risk-free rate is 5%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's…XYZ Co. will pay a $3.20 per share dividend at the end of the year. The dividend growth rate = 8.5% per year Stock Price = $62.20 What is the required rate of return?Topstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along with the firm's earnings, is expected to grow at a rate of 5% per annum forever. If the current market price for a share of Topstone is $38.61, what is the implied cost of equity? O A. O B. 10.44% O D. 11.22% O C. 10.71% 10.18% OE. 5.36% 7
- The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 7% per year. Callahan's common stock currently sells for $25.25 per share; its last dividend was $2.00; and it will pay a $2.14 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % If the firm's beta is 2.0, the risk-free rate is 6%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost…The Evanec Company's next expected dividend, D1, is $2.69; its growth rate is 7%; and its common stock now sells for $35.00. New stock (external equity) can be sold to net $31.50 per share. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. rs = % What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F = % What is Evanec's cost of new common stock, re? Do not round intermediate calculations. Round your answer to two decimal places. re = %Krell Industries has a share price of $21.55 today. If Krell is expected to pay a dividend of $1.08 this year and its stock price is expected to grow to $24.57 at the end of the year. The dividend yeild is? (Round to one decimal place)The capital rate gain is? (Round to one decimal place)The total return is? (Round to one decimal place)
- The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $21.25 per share; its last dividend was $1.80; and it will pay a $1.89 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % If the firm's beta is 0.7, the risk-free rate is 4%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 13%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the judgmental risk premium of 4% in your calculations. Round your answer to two decimal places. % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Do not…A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $2 per share and sells for $57. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $43. What are the dividend yield and percentage capital gain in this case?The 5-year average P/E ratio for a firm is 20.00. This year 's earning per share is $5.00 and it is expected to at a constant growth rate of 6%. What is the projected stock price for the next year? А. S4 В. $104 C. S80.25 D. $94.33 E. $106
- Company Z-prime's earnings and dividends per share are expected to grow by 4% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year's dividend is $9, the cost of equity is 9%, and next year's EPS is $14. What is Z-prime's stock price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Stock pricePrice/Earnings Ratio for the S&P 500 is 15 and the dividend payout ratio of the S&P 500 is 28%. The future growth rate of dividends is expected to be 3.35%. What is the expected return of the market?Suppose Lilly V, Inc. has just paid a dividend. The next dividend, to be paid in a year, is forecasted to be $4. If the growth rate of dividends is 7% and the discount rate is 11%, at what price will the stock sell? a.Less than $100 b.More than $100 c.$100 d.$111