We Are Life Limited (WALL) has done it again by creating a vaccine for the novel corona virus. WALL is expected to pay a dividend of $2.45 next year after which dividends should enjoy growth of 15% for 2 years. Dividend growth is then expected to fall to 7% for 1 year before settling at a constant growth of 4% for the foreseeable future. The cost of capital is 24%. ) Calculate WALL’s share price today (P0). ) Calculate the expected share price three years from today (P3). ) Calculate the dividend yield for year 4.
We Are Life Limited (WALL) has done it again by creating a vaccine for the novel corona virus. WALL is expected to pay a dividend of $2.45 next year after which dividends should enjoy growth of 15% for 2 years. Dividend growth is then expected to fall to 7% for 1 year before settling at a constant growth of 4% for the foreseeable future. The cost of capital is 24%. ) Calculate WALL’s share price today (P0). ) Calculate the expected share price three years from today (P3). ) Calculate the dividend yield for year 4.
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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- We Are Life Limited (WALL) has done it again by creating a vaccine for the novel corona virus. WALL is expected to pay a dividend of $2.45 next year after which dividends should enjoy growth of 15% for 2 years. Dividend growth is then expected to fall to 7% for 1 year before settling at a constant growth of 4% for the foreseeable future. The cost of capital is 24%.
- ) Calculate WALL’s share price today (P0).
- ) Calculate the expected share price three years from today (P3).
- ) Calculate the dividend yield for year 4.
- Cohen and Company Limited (CAC) has three
preferred stocks on the market, each with a par value of $90. The stocks have dividends and yield as presented in the table below.
|
Name |
Dividends |
Yield |
|
Series X |
8.0% |
10.5% |
|
Series Y |
7.2% |
9.8% |
|
Series Z |
6.5% |
11.1% |
Calculate the price for each of the three preferred stocks?
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