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A
To calculate: The market price of Chiptech stock is to be determined when the required return is 15% and company has gone ex-dividend.
Introduction:
The market price can be defined as the price at which the commodity will be sold in the market.
The intrinsic value of stock can be called as the anticipated or calculated value of the company which may or may not be same as the current market value. The intrinsic value of the stock also includes the tangible and intangible factors.
The
B
To calculate: The estimation of Chiptech intrinsic value as per the given information.
Introduction:
The market price can be defined as the price at which the commodity will be sold in the market.
The intrinsic value of stock can be called as the anticipated or calculated value of the company which may or may not be same as the current market value. The intrinsic value of the stock also includes the tangible and intangible factors.
The rate of return can be defined as the annual income which will be return after the investment of the investors.
C
To calculate: The rate of return of Chiptech stock in coming year (t=0 and t=1) is to be determined.
Introduction:
The market price can be defined as the price at which the commodity will be sold in the market.
The intrinsic value of stock can be called as the anticipated or calculated value of the company which may or may not be same as the current market value. The intrinsic value of the stock also includes the tangible and intangible factors.
The rate of return can be defined as the annual income which will be return after the investment of the investors.
D
To calculate: The rate of return of Chipstock in second year (t=1 and t=2) as per the given information.
Introduction:
The market price can be defined as the price at which the commodity will be sold in the market.
The intrinsic value of stock can be called as the anticipated or calculated value of the company which may or may not be same as the current market value. The intrinsic value of the stock also includes the tangible and intangible factors.
The rate of return can be defined as the annual income which will be return after the investment of the investors.
E
To calculate: The rate of return of Chipstock in third year (t=2 and t=3) is to be determined.
Introduction:
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Chapter 18 Solutions
Investments
- Propulsion Sciences' (PS) stock dividend has grown at 0.06 per year for as long as anyone can remember. Investors believe that a year from now the company will pay a dividend of $3 and that dividends will continue their 0.06 growth indefinitely. If the market price Is on PS stock is 25 and it is under valued by $3.5 and the company pays $2 as flotaticn cost. what is the cost of the stock?arrow_forwardZebra is a new firm in a rapidly growing industry. the company is planning on increasing its annual dividend by 0.11 a year for the next 3 years and then decreasing the growth rate to 0.03 per year. the company just paid its annual dividend in the amount of 1 per share. What is the current value of one share of this stock if the required rate of return is 0.155" what is the price of the stockarrow_forwardSouthern Power just paid an annual dividend of $6.1 per share. Because of increasing competition from home solar installations, the dividend is expected to shrink by 3% per year. The required rate of return is 8%. What is the intrinsic value of the stock?arrow_forward
- Simplicity is a relatively new firm that appears to be on the road to great success. The company paid their first annual dividend yesterday in the amount of P0.15 a share. The company plans to double each annual dividend payment for the next four years. After that time, they are planning on paying a constant dividend of P2.50 per share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 13.45 percent?arrow_forwardSouthern Power just paid an annual dividend of $7.7 per share. Because of increasing competition from home solar installations, the dividend is expected to shrink by 2% per year. The required rate of return is 8%. What is the value of the stock?arrow_forwardPharmacology just paid an annual dividend of $1.80 per share. It’s a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 5.00% per year. The nominal cost of capital is 11.75%. What is Pharmecology’s current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What would be Pharmecology’s current stock price using forecasted real dividends and a real discount rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forward
- Need helparrow_forwardMetallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $16.25 per share 12 years from today and will increase the dividend by 5.5 percent per year, thereafter. If the required return on this stock is 13.5 percent, what is the current share price? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current share price Harrow_forwardPhiladelphia Corporation's stock recently paid a dividend of $2.00 per share (D0 = $2), and the stock is in equilibrium. The company has a constant growth rate of 5 percent and a beta equal to 1.5. The required rate of return on the market is 15 percent, and the risk-free rate is 7 percent. Philadelphia is considering a change in policy which will increase its beta coefficient to 1.75. If market conditions remain unchanged, what new constant growth rate will cause the common stock price of Philadelphia to remain unchanged?arrow_forward
- An analyst for JPGR Bank & Trust is considering the value of ZBX stock. ZBX isn't currently paying dividends, but just announced that they will pay their first quarterly dividend of $1.40 per share, starting 5 quarters (1.25 years) from today. The analyst thinks its safe to assume that the firm will not increase the dividend anytime soon, and so will value it as if the dividend will not grow. Given this information, what would be the value of ZBX stock if using a required rate of return of 16% APR compounded quarterly? Enter answer in dollars and cents, rounded to the nearest cent.arrow_forwardA company’s common stock is currently selling at $40 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend will grow at 10% per year in the foreseeable future. What is the company’s equity cost of retained earnings? If the company sells new common stock to finance new projects and most pay $2 per share in flotation costs, what is the cost of equity? Be sure to include your work for all calculations.arrow_forwardPlease help with answers asap.arrow_forward
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