Jumbo Shrimp Oxymorons, Inc. recently paid a dividend of $2.06 per share. The firm expects explosive growth of 20% over the nexttwo years. After that the firm's managers expect that growth will drop to 14% for the following three years, then settle at 8% indefinitely.If investors require a rate of return of 14.80% on Jumbo's stock:a. What will be the dividend paid out for the next six years? (Round your answers to 4 decimal places.)D1 =D2 =D3 =D4 =D5 =D6 =b. What is its intrinsic value today? (Round your answer to 2 decimal places.)Intrinsic value

Dividend - This is the amount which is paid by the company to its shareholders. Dividend includes…

Answered: umbo Shrimp Oxymorons, Inc. recently…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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Could I Industries just paid a dividend of $1.10 per share. The dividends are expected to grow at a rate of 20 percent for the next six years and then level off to a growth rate of 4 percent indefinitely. If the required return is 12 percent, what is the value of the stock today?
Spencer Supplies’ stock is currently selling for $60 a share. The firm is expected toearn $5.40 per share this year and to pay a year-end dividend of $3.60.a. If investors require a 9% return, what rate of growth must be expected forSpencer? If Spencer reinvests earnings in projects with average returns equal to thestock’s expected rate of return, what will be next year’s EPS? [Hint: g ROE(Retention ratio).
Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 3.20% per year. The risk-free rate (rRFrRF) is 4.00%, the market risk premium (RPMRPM) is 4.80%, and Portman’s beta is 2.00. What is the dividents one year from now? What is the Horizon value? What is the Intrinsic value?
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Dollar Tree Inc (DLTR) is expected to pay a $1.85 dividend, and it is expected to grow at 9.85% for the next 3 years. After 3 years the dividend is expected to grow at the rate of 5.15% indefinitely. If the required return is 8.15%, what is DLTR's stock value today?
Varigrowth Inc. just paid a dividend of $0.62 (i.e., Do = $0.62). Such dividend is expected to grow by 20% per year for the next 3 years, after which it is expected to grow at a long-run rate of 4%. Assuming investors require a 12% return on the stock, a) What is the price at t=3? $ (to the nearest cent) b) What is its price today? $ (to the nearest cent) c) What is your total rate of return (% to two decimals) if in one year the price is $11.14 and the dividend is $0.75? % What is your dividend yield? What is your capital gain (loss) yield?

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