### Compute today price of the stock

Assignment Help Finance Basics
##### Reference no: EM131402479

1. Suppose the company just paid dividend of \$1. The dividends are expected to grow at 20% in Year 1 and 15% in Year 2. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

2. Suppose the company just paid dividend of \$1. The dividends are expected to grow at 25% in Year 1 and 20% in Year 2, and 15% in Year 3. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

3. Suppose the company will not pay any dividends in Years 1 and 2. Suppose that the company pays dividend of \$1 in Year 3 and after that the dividends will grow at 20% for the next two years. After that the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

4. ABC Company's last dividend was \$3.7.  The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 6% forever.  The firm's required return (rs) is 12%.  What is its current stock price (i.e. solve for Po)?

5. A stock just paid a dividend of D0 = \$1.5.  The required rate of return is rs = 18.6%, and the constant growth rate is g = 4.6%.  What is the current stock price?

6. The common stock of ABC Industries is valued at \$31.2 a share. The company increases their dividend by 11 percent annually and expects their next dividend to be \$1.6. What is the required rate of return on this stock? That is, solve for r.

7. If D1 = \$2, g (which is constant) = 2.4%, and P0 = \$70.4, what is the required rate of return on the stock? That is, solve for r.

8. If D0 = \$2.8, g = 3.2%, and P0 = \$79.4, what is the required rate of return on the stock? That is, solve for r.

9. ABC just paid a dividend of D0 = \$4.3.  Analysts expect the company's dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 7% in Year 3 and thereafter.  The required return on this stock is 14%.  What is the best estimate of the stock's current market value?

10. ABC is expected to pay a dividend of \$3.2 per share at the end of the year.  The stock sells for \$117 per share, and its required rate of return is 18.6%. The dividend is expected to grow at some constant rate, g, forever.  What is the growth rate (i.e. solve for g)?

11. ABC's last dividend was \$3.4.  The dividend growth rate is expected to be constant at 27% for 3 years, after which dividends are expected to grow at a rate of 7% forever. If the firm's required return (rs) is 16%, what is its current stock price (i.e. solve for Po)?

12. ABC's stock has a required rate of return of 14.7%, and it sells for \$28 per share.  The dividend is expected to grow at a constant rate of 7.2% per year.  What is the expected year-end dividend, D1?

13. ABC's last dividend paid was \$1.4, its required return is 18.7%, its growth rate is 3.3%, and its growth rate is expected to be constant in the future.  What is Sorenson's expected stock price in 7 years, i.e., what is P7?

14. ABC Enterprises' stock is currently selling for \$68.4 per share.  The dividend is projected to increase at a constant rate of 5.8% per year.  The required rate of return on the stock is 12%.  What is the stock's expected price 5 years from today (i.e. solve for P5)?

15. The common stock of Wetmore Industries is valued at \$54 a share. The company increases their dividend by 5.8 percent annually and expects their next dividend to be \$4.5. What is the required rate of return on this stock? That is, solve for r.

16. ABC Enterprises' stock is expected to pay a dividend of \$1.9 per share.  The dividend is projected to increase at a constant rate of 5.2% per year.  The required rate of return on the stock is 17.6%.  What is the stock's expected price 3 years from today (i.e. solve for P3)?

17. ABC Inc., is expected to pay an annual dividend of \$0.3 per share next year. The required return is 12.7 percent and the growth rate is 6 percent. What is the expected value of this stock five years from now?

18. If D1 = \$4.35 and P0 = \$63.37, what is the dividend yield?

19. A stock is expected to pay a dividend of \$1.6 at the end of the year.  The required rate of return is rs = 12.5%, and the expected constant growth rate is g = 6.9%.  What is the stock's current price?

#### Questions Cloud

 Do the sample data support her belief : Prior to conducting this experiment, the manager believed the variance in inspection errors was lower for experienced inspectors than for novice inspectors. Do the sample data support her belief? Test using α = .05. Distinguish between theorems and precepts : Distinguish between theorems and precepts. Is it possible for two economists to agree about theorems but disagree about precepts? Why or why not? Shares of common stock outstanding : Leonatti Labs' year-end price on its common stock is \$31.92. The firm has total assets of \$28.00 million, debt ratio of 60 percent, no preferred stock, and 2 million shares of common stock outstanding. Discuss about the generalized anxiety disorder : Generalized anxiety disorder.Discuss the following with regard to the selected disorder:Biological and social ramifications.Prevalence, age of onset, and gender differences. Compute today price of the stock : 1. Suppose the company just paid dividend of \$1. The dividends are expected to grow at 20% in Year 1 and 15% in Year 2. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's pr.. What lessons do you take away from both given case studies : What lessons do you take away from both of these case studies? What are some other issues that might happen to influence such actions in the corporate world? Do you feel that businesses should get tax breaks : Do you feel that businesses should get tax breaks for exporting jobs? In view of this exportation trend, what are your moral and ethical obligations as a business owner to your employees and to the community? Federal reserve increases the money supply : Assess the impact on the U.S. stock market when the Federal Reserve increases the money supply, andwhether or not you believe the impact is predictable. Describe an industry that you believe is in stage 2 of the industry life cycle. Provide evidence .. Select anxiety disorder from the film list : Evaluate three peer reviewed research studies using the Research Analysis.Conceptualize the disorder using one of the following major psychological perspectives: Psychodynamic, Behavioral, or Cognitive-Behavioral.

### Write a Review

#### Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

#### A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

#### Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

#### Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

#### Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

#### What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

#### State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

#### Effect of financial leverage

The Effect of Financial Leverage and working capital management

#### Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

#### Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

#### Time value of money

Time Value of Money project