INVESTMENTS(LL)W/CONNECT
INVESTMENTS(LL)W/CONNECT
11th Edition
ISBN: 9781260433920
Author: Bodie
Publisher: McGraw-Hill Publishing Co.
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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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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY