Nonconstant Dividend Growth ValuationAssume that the average firm in C&J Corporation's industry is expected to grow at a constant rate of 5% and that its dividendyield is 8%. C&J is about as risky as the average firm in the industry and just paid a dividend (Do) of $2.75. Analysts expectthat the growth rate of dividends will be 50% during the first year (90,1 = 50%) and 30% during the second year (91,2 =30%). After Year 2, dividend growth will be constant at 5%.What is the required rate of return on C&J's stock? Do not round intermediate calculations. Round your answer to the nearestwhole number.%What is the estimated intrinsic price per share? Do not round intermediate calculations. Round your answer to the nearestcent.$

Growth= 5%Dividend yield= 8%.Dividend (D0)= $2.75g0,1 = 50%g1,2 = 30%Dividend growth after year 2=…

What is the required rate of return on C&J's stock? Do not round intermediate calculations. Round your answer to the nearest whole number. % What is the estimated intrinsic price per share? Do not round intermediate calculations. Round your answer to the nearest cent. $

What is the required rate of return on C&J's stock? Do not round intermediate calculations. Round your answer to the nearest whole number. % What is the estimated intrinsic price per share? Do not round intermediate calculations. Round your answer to the nearest cent. $

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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АВС XYZ Discount rate (r) Historical growth rate of 0.015+2*0.085=0.185 0.015+1.5*0.085=0.142 (58/30)^(1/30)-1=0.022 Not available. Cannot dividends compute without dividends Sustainable growth rate Fundamental value using dividend growth model with the historical growth rate Fundamental value using the 467*(1+0.185)/(0.185-0.045) dividend growth model with =3953 the sustainable growth rate Fundamental value using residual income growth 0.15*(1-0.7)=0.045 467*(1+0.185)/(0.185-0.022) 0.2*(1-0)=0.2 Not available. Cannot =3395 compute without dividends Not available. Cannot compute without dividends 80*(1+0.022)-(550*0.022)/(0. 185-0.022)=427.36 Not available. Cannot compute without dividends model with the historical growth rate Fundamental value using the 80*(1+0.045)-(550*0.045)/(0. residual income growth 12*(1+0.2)-(100*0.2)/(0.142- 0.2)=96.5 185-0.045)=420.35 model with the sustainable growth rate
The Swanson Corporation's common stock has a beta of 1.8. If the risk-free rate is 4.9 percent and the expected return on the market is 11 percent, what is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital %
Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t. Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B, and C from time period 1 to time period 2? B C zero P(1) 95 45 100 -20.83% 20.83% None of the above Q(1) 100 200 200 P(2) 95 45 50 Q(2) 100 200 400
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On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? _______________ Calculate the required return of a portfolio that has $6,000 invested in Stock X and $5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp = __________% If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 22 % Normal 0.50 9 % Weak 0.25 -6 % What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's coefficient of variation? Do not round intermediate calculations. Round your answer to two decimal places.
The duration of a preferred stock is its maturity. OA. Greater than or less than, depending on its YTM OB. Less than OC. Greater than O D. Equal to
The “market RISK premium”
An analyst estimates the intrinsic value of a stock to be in the range $79 to $61. The current market price of the stock is $58. If the analyst is correct in their estimation of intrinsic value, the stock is likely to be: O A. Over-valued O B. Under-valued OC. Fairly-valued

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