The expected growth rate of MBI dividends when the stocks is selling at $50 per share. Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

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Answer 1

Question

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

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Students have asked these similar questions

a. Computer stocks currently provide an expected rate of return of 16%. MBI, a large computer company, will pay a year-end dividend of $2 per share. If the stock is selling at $50 per share, what must be the market’s expectation of the dividend growth rate?b. If dividend growth forecasts for MBI are revised downward to 5% per year, what will happen to the price of MBI stock?c. What (qualitatively) will happen to the company’s price–earnings ratio?

Earnings this year will be $6 per share, and investors expect a rate of return of 8% on stocks facing the same risks as Web Cites. a. What is the sustainable growth rate? b. What is the stock price? c. What is the present value of growth opportunities (PVGO)? d. What is the P/E ratio? e. What would the price and P/E ratio be if the firm paid out all earnings as dividends? (Do not round intermediate calculations. Round your answers to 2 decimal places.) > Answer is complete but not entirely correct. a. Sustainable growth rate 2.00 % b. Stock price $ 91.84 x C. PVGO $ (13.78) X d. P/E ratio 10.20 x e. Price $ 75.00 P/E ratio 12.50

Computer stocks currently provide an expected rate of return of 18%. MBI, a large computer company, will pay a year-end dividend of $2.30 per share. a. If the stock is selling at $53 per share, what must be the market's expectation of the dividend growth rate? (Round your answer to 2 decimal places.) b. If dividend growth forecasts for MBI are revised downward to 7% per year, what will happen to the price of MBI stock? A. The price will fall. B. The price will rise. c. What (qualitatively) will happen to the company's price–earnings ratio? A. The price–earnings ratio will fall. B. The price–earnings ratio will rise.

Answer 2

Question

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Answer 6

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

Answer 7

Chapter 18, Problem 8PS

A

Summary Introduction

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

Answer 8

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

Answer 9

B

Summary Introduction

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

Answer 10

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Answer 11

C

Summary Introduction

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 18 - Prob. 1PS Ch. 18 - Prob. 2PS Ch. 18 - Prob. 3PS Ch. 18 - Prob. 4PS Ch. 18 - Prob. 5PS Ch. 18 - Prob. 6PS Ch. 18 - Prob. 7PS Ch. 18 - Prob. 8PS Ch. 18 - Prob. 9PS Ch. 18 - Prob. 10PS

The expected growth rate of MBI dividends when the stocks is selling at $50 per share. Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

Solution Summary: The author calculates the expected growth rate of MBI dividends when the stocks is selling at 50 per share.

Concept explainers

Videos

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Want to see the full answer?

Chapter 18 Solutions

The expected growth rate of MBI dividends when the stocks is selling at $50 per share. Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

Solution Summary: The author calculates the expected growth rate of MBI dividends when the stocks is selling at 50 per share.

Concept explainers

Videos

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share. Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year. Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

To explain: Effect on the price earnings ratio of the company. Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.

Want to see the full answer?

Chapter 18 Solutions

To calculate: The expected growth rate of MBI dividends when the stocks is selling at $50 per share.

Introduction: The growth rate is defined as the difference of the return rate and ratio of the dividend and current price.

To calculate: The MBI stock’s price when dividend growth decreased by 5% per year.

Introduction: The stock value is ratio of dividend to the difference of return rate and growth rate.

To explain: Effect on the price earnings ratio of the company.

Introduction: Due to decrement of growth rate and no other sources for earnings, the price- earnings ratio is decreasing.