what is its current share price?

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
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Solinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8 years, since the firm needs to plow back its earnings to fuel growth. The company will then pay a $1.76 per share dividend in year 9 and will increase the dividend by 3.7 percent per year thereafter. If investors require 8.9 percent return to invest in this stock, what is its current share price? (Do not include the dollar sign ($), Round your answer to 2 decimal places

You've collected the following information from a financial web site.
52-Week Price
Hi
77.40
56.56
130.93
Lo
10.43
34.17
69.50
Stock (Div)
Palm Coal 0.36
Lake Lead Grp
2.29
SIR 2.00
Div
Yld %
2.6
5.6
2.2
PE
Ratio
6
10
10
Close
Price
13.90
41.18
88.97
Net
Chg
-0.24
-0.01
3.07
According to your research, the growth rate in dividends for Palm Coal for the previous 10 years has
been 3.16 percent. If investors feel this growth rate will continue, what is the required return for Palm
Coal stock? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)
Transcribed Image Text:You've collected the following information from a financial web site. 52-Week Price Hi 77.40 56.56 130.93 Lo 10.43 34.17 69.50 Stock (Div) Palm Coal 0.36 Lake Lead Grp 2.29 SIR 2.00 Div Yld % 2.6 5.6 2.2 PE Ratio 6 10 10 Close Price 13.90 41.18 88.97 Net Chg -0.24 -0.01 3.07 According to your research, the growth rate in dividends for Palm Coal for the previous 10 years has been 3.16 percent. If investors feel this growth rate will continue, what is the required return for Palm Coal stock? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)
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