Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 7, Problem 7.5WUE
Summary Introduction

To determine: The value of the ST stocks.

Introduction: Common stock is a security which represents the ownership in company. Common stock holder have are right to take decision on corporate policy.

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Stacker Weight Loss currently pays an annual​ year-end dividend of $1.20per share. It plans to increase this dividend by 5.0%next year and maintain it at the new level for the foreseeable future. If the required return on this​ firm's stock is 10%​, what is the value of​ Stacker's stock? _______________________________________________________________________________ The value of​ Stacker's stock is ​$__________. ​(Round to the nearest​ cent.)
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The FI Corporation's dividends per share are expected to grow indefinitely by 6% per year. a. If this year's year-end dividend is $8.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? Current stock price b. If the expected earnings per share are $16.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) Value of ROE c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)? (Round your answer to 2 decimal places.) Amount % per share

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Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)

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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY