not use ai please XYZ corp expects to earn $4.9 per share next year and plow back 48.98% of itsearnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 51.02%of its earnings). The dividends are expected to grow at a constant sustainable growthrate and the stocks are currently priced at $30 per share. How much of the stock's$30 price is reflected in Present Value of Growth Opportunities (PVGO) if theinvestors' required rate of return is 20%? $

Earnings per Share (EPS):EPS measures the amount of profit allocated to each outstanding share of a…

Answered: XYZ corp expects to earn $4.9 per share…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 16MC

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XYZ corp expects to earn $3.3 per share next year and plow back 24.24% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 75.76% of its earnings). The dividends are expected to grow at a constant sustainable growth rate and the stocks are currently priced at $30 per share. How much of the stock's $30 price is reflected in Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20%? $_________
XYZ corp expects to earn $4 per share next year and plow back 37.5% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 62.5% of its earnings). The dividends are expected to grow at a constant sustainable growth rate and the stocks are currently priced at $30 per share. How much of the stock's $30 price is reflected in Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20% ? (Hint: PVGO= value with growth- value with no growth when no earnings is plowed back) $0 $10 OO $8 $6
Weber Integrated Systems Inc. is expected to pay a year-end dividend of $0.90 per share (i.e. D1 = $0.90), and that dividend is expected to grow at a constant rate of 4.00% per year in the future. The company's beta is 1.20, the market risk premium is 5.00 %, and the risk - free rate is 4.00 % . What is the company's current stock price? a. $15.00 b. $15.60 c. $16.33 d. $17.77 e. $ 18.20
CanPro Co. is expecting that its dividend for this coming year will be $1.2 a share and that all future dividends are expected to increase by 3 percent annually. What is the required return of this stock if the current market price of the stock is $17?
Ocean Holding Corp.'s expected year-end dividend (D1) is $4.00, and its required return is 11 %. The company's dividend yield is 5.5 %, and its growth rate is expected to be constant in the future. What is the firm's stock price?
Suppose you know that Bird Eye's stock currently sells for $80 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the dividend per share for next year?
The future earnings, dividends, and common stock price ofCallahan Technologies Inc. are expected to grow 6% per year. Callahan’s common stockcurrently sells for $22.00 per share, its last dividend was $2.00, and it will pay a $2.12 dividendat the end of the current year.a. Using the DCF approach, what is its cost of common equity?b. If the firm’s beta is 1.2, the risk-free rate is 6%, and the average return on the market is13%, what will be the firm’s cost of common equity using the CAPM approach?c. If the firm’s bonds earn a return of 11%, based on the bond-yield-plus-risk-premiumapproach, what will be rs? Use the midpoint of the risk premium range discussed inSection 10-5 in your calculations.d. If you have equal confidence in the inputs used for the three approaches, what is yourestimate of Callahan’s cost of common equity?
The future earnings, dividends, and common stock price ofCallahan Technologies Inc. are expected to grow 6% per year. Callahan’s common stockcurrently sells for $22.00 per share, its last dividend was $2.00, and it will pay a $2.12 dividendat the end of the current year.a. Using the DCF approach, what is its cost of common equity?b. If the firm’s beta is 1.2, the risk-free rate is 6%, and the average return on the market is13%, what will be the firm’s cost of common equity using the CAPM approach?c. If the firm’s bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? d. If you have equal confidence in the inputs used for the three approaches, what is yourestimate of Callahan’s cost of common equity?
A company currently pays a dividend of $3.8 per share (D0 = $3.8). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.4, the risk-free rate is 9.5%, and the market risk premium is 4.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
Vcast, Inc., is expected to grow at a constant rate of 9 percent. The company will pay a dividend of $2.50 next year and the current price of the stock is $30.35. If investors. require a return of 18% on similar stocks, how much is the stock worth and is it a good buy?
Suppose that your company is expected to pay a dividend of $1.50 per share next year. The growth in dividend has been steady at 5.1% p.a. and the market expects this growth to continue. If the share is priced at $25 per share, is a 4% cost of equity tenable?
The next dividend payment by Hoffman, Inc., will be $2.85 per share. The dividends are anticipated to maintain a growth rate of 7.5 percent forever. Assume the stock currently sells for $49.30 per share. What is the dividend yield and the expected capital gains yield?

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