The earnings, dividends, and stock prices are expected to grow at 7% per year in the future. Common stock sells for $23 per share its last dividend was $2.00 and the company will pay a dividend of $2.14 at the end of the current year. Using the discounted cash flow approach, what is the equity?
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- What is the required rate of return on these financial accounting question?The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 7%per year in the future. Shelby’s common stock sells for $23 per share, its last dividend was $2.00, and the company will pay a dividend of $2.14 at the end of thecurrent year.a. Using the discounted cash flow approach, what is its cost of equity?b. If the firm’s beta is 1.6, the risk-free rate is 9%, and the expected return on themarket is 13%, what will be the firm’s cost of equity using the CAPMapproach?c. If the firm’s bonds earn a return of 12%, what will rs be using the bond-yieldplus-risk-premium approach? (Hint: Use the midpoint of the risk premiumrange.)d. On the basis of the results of parts a through c, what would you estimateShelby’s cost of equity to beProvide Answer with calculation and explanation
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- What is the required return on these financial accounting question?Assume that a share of stock has just paid an annual dividend of $3.00 (Do), and that this dividend is expected to grow by $0.07 in each future year (i.e., $3.07 in Year 1, $3.14 in Year 2, $3.21 in Year 3, etc.). Also assume that investors require a 15.0 percent rate of return. Given this information, and using the Banko growth model, determine what the current price of this stock should be. Answer in XX.XX format, with no dollar sign. For example, if your answer is $18.29, enter "18.29".If the last dividend paid by Chemical Brothers Inc. was $1.25 and analysts expect these payments to increase 4% per year, what will the stock price be next year if the required return is 15%? Select one: O a. $12.29 O b. $11.82 O c. $31.25 O d. $12.78 O e. $23.11