What is the value of the common stock of ABD Company if the dividend paid last year was $3.50, at a constant growth of 5 percent and investors require a 20% rate of return?
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- Suppose a company just paid a dividend for RM0.30 and expects to increase dividendsby 3% per year. The required return is 8%. Calculate the value of the stock.If the dividend paid last year was $3.50, at a constant growth rate of 5%, and investors demand a 20% rate of return, what is the value of the common stock of ABD Company?What should be the price of a share with a constant dividend of $2.50, if the growth rate is zero and the required rate of return is 8 per cent per annum?
- DRAW THE CASH FLOW DIAGRAM Ashley purchased a common stock worth $5,000 every year (starting in year 1) for a period of 10 years. At the end of the 10th year, she sold all her stocks to a buyer for $80,000. Find the rate of return received on the investment.The common stock of XYZ paid $1.32 in dividends last year. Dividends are expected to grow at an 8% annual rate for an indefinite number of years. If the require rate of return is 10.5%, should you make this investment? Why?Consider company ABC. Today it is 1st of January 2023 and ABC has just paid a dividend of £3 million. The expected earnings of ABC for the next 30 years are forecast to grow at a rate of 15% per annum. From 1st of January 2053 and onwards the earnings of ABC are expected to grow at a rate of 5%. The required rate of return of ABC is 12% per annum. The current dividend policy of ABC is such that they pay out 50% of its earnings as dividends (assume that they pay their dividends on 1st of January every year). a) Suppose that the dividend payout ratio is expected to stay constant in the future. What is the value of ABC stock? Show and explain your calculations and any assumptions you make. b) Just after the dividend payment on 1st of January 2043, ABC is planning to reduce their dividends and only pay out 40% of its earnings. What is the value of ABC under the new dividend policy? c) Provide a recommendation to the management of ABC as to whether they should increase/cut back on…
- A stock had returns of 14 percent, 17 percent, 14 percent, 20 percent, 16 percent, and 2 percent over the last six years. What is the arithmetic return for the stock? Arithmetic return What is the geometric return for the stock? Geometric returnConsider the following bond purchased at $800 in 2018. F=1000; C=100; N=5; P=800 If the investor sold the bond in 2019 without holding till maturity did he/she make a profit or a loss? What is the rate of return in 2019?You may purchase 100 shares of Mun Tee ltd on a 55 percent margin when the shares are selling at K20 each. The Lusaka stock exchange broke charges you 10 percent annual interest,and commission are 3 percent of total stock value on both the purchase and the sale. If a year later you receive a K0.50 per share dividend and sell the stock for K27. What's your rate of return on investment?
- The rate of net investment 50t2/3 and capital stock at t=0 is 100. Find the capital stock function.What is the definition of internal rate of return (IRR)? If you expect the annual interest rates are much different in the next 10 years, would the IRR be the ideal measure? Why or why not?BUKALAPAK is considering the offer to strengthen its position in the e-commerce platform market in South East Asian and Asia by attracting global investors. Critically examine the factors that the senior management of BUKALAPAK will have to consider in relation to strengthening its position to attract global investors (Note: are you welcome to provide additional calculation to support your critical examination).