A firm recently paid a dividend of $1.75 per share. Thedividend is expected to grow by 13% for the next 2 years. Thedividend is expected to grow by a more modest 3.50%thereafter. What is the firm's stock value per share given a6.95% discount rate?$58.61○ $62.41$21.47○ $70.84

To calculate the stock value per share using the dividend growth model, we can use the formula:Stock…

Answered: A firm recently paid a dividend of…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 1P: Thress Industries just paid a dividend of 1.50 a share (i.e., D0 = 1.50). The dividend is expected...

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Similar questions

The Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. Compute the stock’s earnings per share (EPS). What is the stock’s P/E ratio? Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.
Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12% rate of return. Although the dividend has been growing at a rate of 30% per year in recent years, this growth rate is expected to last only for another 2 years (g0,1 = g1,2 = 30%). After Year 2, the growth rate will stabilize at gL = 7%. What is CCC’s stock worth today? What is the expected stock price at Year 1? What is the Year 1 expected (1) dividend yield, (2) capital gains yield, and (3) total return? What is its expected dividend yield for the second year? The expected capital gains yield? The expected total return?
A firm is expected to pay a dividend of $3.90 one year from now and $4.25 two years from now and $4.30 three years from now. The firm's stock price is expected to be $110.50 in four years. What is the firm's stock value using a 13.78% required return? ○ $75.56 $201.47 $73.36 ○ $65.93
A company is expected to pay a dividend of $6.73 in the following period. If the expected growth rate of this dividend is 4.00% and the expected rate of return or discount rate for this stock is 11.00%, the current share price in dollars is closest to: O A. $99.99 O B. $61.18 O C. $96.14
Francis Inc.'s stock has a required rate of return of 10.25%, and it sells for $87.50 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D1? a. $2.79 O b. $4.65 O c. $3.72 O d. $3.90 Ое. $3.16
The Belichick Hoodie Co. just paid a dividend of $3.96 per share on its stock. The dividends are expected to grow at a constant rate of 6.3 percent per year indefinitely. The current share price is $52.70. What is the company's dividend yield? Suggested Formula(s): Dividend yield = D:/Po Select one: OA 9.73% OB. 7.99% OC. 7.51% OD. 7.04% DE 9.34%
A firm will start paying dividend of $3 per year from year-3. The return on equity is 15% and the pay-out ratio is 60%. If the investors required rate of return is 20% compute the current price of Stock. a. $ 20.00 b. $ 21.43 C. $ 14.88 d. $ 15.00
J Pinkman Motors paid a dividend of $ 3.75 last year. If J Pinkmans return on equity is 24% and its retention rate is 25%, what is the value of the common stock if investors require a 20% rate of return? a. $ 38.39 b. $18.39 c. $82.39 d. $ 28.39
A firm recently paid a $1.91 per share dividend. The dividend is expected to grow by 5.15% per year. At the current stock price of $13.50 per share, what is the return shareholders are expecting? 14.15% 14.88% 19.30% 20.03%
A company has stock which costs $42.75 per share and pays a dividend of $2.70 per share this year. The company's cost of equity is 9%. What is the expected annual growth rate of the company's dividends? O A. 10.72% В. 5.36% С. 2.68% O D. 8.04%

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A firm recently paid a dividend of $1.75 per share. The dividend is expected to grow by 13% for the next 2 years. The dividend is expected to grow by a more modest 3.50% thereafter. What is the firm's stock value per share given a 6.95% discount rate? $58.61 ○ $62.41 $21.47 ○ $70.84