You've collected the following information from your favorite financial website. 52-Week Price Lo 47.80 Acevedo 1.12 70.28 Georgette, Incorporated 2.50 143.13 YBM 6.45 64.13 Manta Energy 3.12 96.20 Winter Sports 1.57 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 8 percent. Hi 64.60 145.94 181.19 82.56 113.19 Dividend PE Yield % Ratio Stock (Dividend) 1.9 2.1 3.9 4.3 1.9 35.6 70.9 23.8 17.6 15.5 Close Price 62.91 118.64 165.39 72.56 ?? Net Change -.05 -.62 .19 .84 .10
You've collected the following information from your favorite financial website. 52-Week Price Lo 47.80 Acevedo 1.12 70.28 Georgette, Incorporated 2.50 143.13 YBM 6.45 64.13 Manta Energy 3.12 96.20 Winter Sports 1.57 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 8 percent. Hi 64.60 145.94 181.19 82.56 113.19 Dividend PE Yield % Ratio Stock (Dividend) 1.9 2.1 3.9 4.3 1.9 35.6 70.9 23.8 17.6 15.5 Close Price 62.91 118.64 165.39 72.56 ?? Net Change -.05 -.62 .19 .84 .10
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
Related questions
Question
pm.4
Transcribed Image Text:You've collected the following information from your favorite financial website.
52-Week Price
Lo
47.80
70.28
143.13
64.13
Manta Energy 3.12
96.20 Winter Sports 1.57
Hi
64.60
145.94
181.19
82.56
113.19
Stock (Dividend)
Acevedo 1.12
a. Current stock price
b. Valuation
Georgette, Incorporated 2.50
YBM 6.45
Dividend
PE
Yield % Ratio
35.6
70.9
23.8
1.9
2.1
3.9
4.3
1.9
17.6
15.5
Close
Price
62.91
118.64
165.39
72.56
??
Net
Change
-.05
-.62
.19
.84
.10
According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 8 percent.
Suppose YBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to
3.5 percent, indefinitely. Assume investors require a return of 10 percent on YBM stock.
a. 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.
b. Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?
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