The firm just paid a dividend of D0 = ₱ 1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock’s current market value?   2. The firm expects earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company’s last dividend, D0, was ₱ 1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?   3. The firm’s last dividend was ₱ 1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?   4. The last dividend paid by the firm was ₱ 1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return (rs) is 12.0%. What is the best estimate of the current stock price?   5. The last dividend paid by the firm was ₱ 1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock 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
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1. The firm just paid a dividend of D0 = ₱ 1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock’s current market value?

 

2. The firm expects earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company’s last dividend, D0, was ₱ 1.25, its beta is
1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

 

3. The firm’s last dividend was ₱ 1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is
the best estimate of the current stock price?

 

4. The last dividend paid by the firm was ₱ 1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return
(rs) is 12.0%. What is the best estimate of the current stock price?

 

5. The last dividend paid by the firm was ₱ 1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return
(rs) is 11%, what is its current stock price?

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What is the intrinsic value of a stock which last paid a dividend of $1.75 and is expected to grow at 22% over the next 2 years after which it will settle down at a stable rate of 8% per annum? The investor’s required rate of return is 15%.

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