The face value of the share is Rs 10 and the company paid dividend @ 20% last year it is expected to grow at 6% in future at constant rate , required rate is 12% . Assuming expected growth rate & required rate of return remain same at what will be the price of share after 2 years a. Rs 35.38 b. Rs 38.25 c. Rs 36.75 d. Rs 40.40

The face value of the share is Rs 10 and the company paid dividend @ 20% last year it is expected to grow at 6% in future at constant rate , required rate is 12% . Assuming expected growth rate & required rate of return remain same at what will be the price of share after 2 years a. Rs 35.38 b. Rs 38.25 c. Rs 36.75 d. Rs 40.40

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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The next dividend payment by Savitz, Inc., will be $4.85 per share. The dividends are anticipated to maintain a growth rate of 2 percent forever. If the stock currently sells for $53 per share, what is the required return? A. 9.15% B. 11.15% C. 10.93% D. 2.00% E. 10.59%
Last year Fauji Fertilizer Company Limited (FFCI) gave an annual dividend per share of Rs. 8.85 which is expected to grow at 5%, forever. Calculate the per share price of the stock if its required rate of return is 14%?
If the current year's dividend was $2 per share and all future dividends will decrease by 5% annually. What is the stock worth today at a required return of 15%?A. 9.5 B. 10C. 20
Dalmatian Co. is currently paying a dividend of P2.20 per share. The dividends are expected to grow at 25% per year for the next four years and then grow 5% per year thereafter. Calculate the expected dividend in year 6. A. P5.37 B. P2.95 C. P5.92 D. P8.39
1. XYZ Corporation is currently paying a dividend of $1.5 per share and is expected to increase this dividend by 10% per year for the next two year. After this, dividends are expected to grow at a stable rate of 4% annually. If the required rate of return on the stock is 8%, what is the current value of a share? A. $40.00 B. $42.25 C. $47.19 D. $43.62 2. JW Corporation is expected to pay a dividend of $1.80 per share next year. After that, dividends are expected to grow by 3% annually indefinitely. The current stock price is $30.00. If your required rate of return is 10%, should you purchase the stock today? Why or why not? A. No; The stock has a present value of $31.50 per share. B. Yes; The stock has a present value of $31.50 per share. C. No; The stock has a present value of $25.71 per share. D. Yes; The stock has a present value of $25.71 per share. E. No; The stock has a present value of $36.00 per share.
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
A Company is currently paying a dividend of Rs 10.00 per share and is expected to grow at a rate of 12 percent per year for five years and thereafter at a rate of 6% per year. Calculate the present value of the share if the required rate of return of 10%.
Given that the NPV per share of the reinvestment of the retained earnings next year for a firm is $2.50. Assuming the growth of the NPV is constant at 5% each year, with the required return rate of 12%, what is the estimated Present Value of Growth Opportunity (PVGO)? a. $35.71 b. $59.23 c. $46.75 d. $24.56
The dividends and stock price of Mimi Company are expected to grow at 5 percent per year at very far future year. Mimi's common stock sells for P25 per share, its last dividend was P2.50, Mimi should pay P2.50 flotation cost. What is the expected return on retained earnings for Mimi Company? a. 15.00 percent b.16.11 percent c.15.5 percent d.16.67 percent
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