You've collected the following information from your favorite financial website. 52-Week Price Lo 10.43. Acevedo .36 Hi 77.40 55.81 131.01 50.24 35.00 Stock (Dividend) 33.42 Georgette, Incorporated 1.54 YBM 2.40 69.90 13.95 20.74 Manta Energy .80 Winter Sports .32 Dividend Yield 2.6 3.8 2.7 5.2 1.5 PE Ratio. 6 10 10 6 28 Close Price: 13.90 40.43 89.05 15.43 27 Net Change -.24 -.01 3.07 -.26 18 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 19.5 percent. Suppose YBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5 percent, indefinitely. Assume investors require a return of 14 percent on YBM stock. According to the dividend growth model, what should the stock price be today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?
You've collected the following information from your favorite financial website. 52-Week Price Lo 10.43. Acevedo .36 Hi 77.40 55.81 131.01 50.24 35.00 Stock (Dividend) 33.42 Georgette, Incorporated 1.54 YBM 2.40 69.90 13.95 20.74 Manta Energy .80 Winter Sports .32 Dividend Yield 2.6 3.8 2.7 5.2 1.5 PE Ratio. 6 10 10 6 28 Close Price: 13.90 40.43 89.05 15.43 27 Net Change -.24 -.01 3.07 -.26 18 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 19.5 percent. Suppose YBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5 percent, indefinitely. Assume investors require a return of 14 percent on YBM stock. According to the dividend growth model, what should the stock price be today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?
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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Question
Transcribed Image Text:You've collected the following information from your favorite financial website.
52-Week Price
Lo
10.43 Acevedo .36
33.42
69.90
13.95
Manta Energy .80
20.74 Winter Sports 32
Hi
77.40
55.811
131.01
50.24
35.00
Stock (Dividend)
Georgette, Incorporated 1.54
YBM 2.40
Stock currently
Dividend PE
Yield Ratio.
2.6
3.8
2.7
5.2
1.5
6
10.
10
6
28
close
Price: Net Change
13.90
40.43
89.05
15.43
27
Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?
-.24
-.01
According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 19.5 percent. Suppose YBM meets
this growth rate in dividends for the next five years and then the dividend growth rate falls to 5 percent, indefinitely. Assume investors
require a return of 14 percent on YBM stock. According to the dividend growth model, what should the stock price be today?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current stock price
3.07
-.26
18
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