33. Nonconstant Growth. Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20% per year for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5%. The most recent annual dividend was DIV, = $1 per share. (LO7-2) a. What are the expected values of: (i) DIV1, (ii) DIV2, (iii) DIV3, and (iv) DIV4? b. What is the expected stock price 4 years from now? The discount rate is 10%. c. What is the stock price today?
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- Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20% per year for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5%. The most recent annual dividend was DIVO = $1 per share. Compute the value of Better Mousetraps for assumed sustainable growth rates of 6% through 9%, in increments of 0.5% and compute the percentage change in the value of the firm for each 1 percentage point increase in the assumed final growth rate, g. using a required rate of return of 10%. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Sustainable Growth Rate 5.00% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% Intrinsic Value (PV) 34.74 42.53 48.09 55.51 65.90 81.48 107.44 159.37 % Change in PV 22.42% % % %Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20% per year for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5%. The most recent annual dividend was DIV0 = $1 per share. Compute the value of Better Mousetraps for assumed sustainable growth rates of 6% through 9%, in increments of .5% and compute the percentage change in the value of the firm for each 1 percentage point increase in the assumed final growth rate, g. (Do not round intermediate calculations. Round your answers to 2 decimal places.)XYZ Corp. is anticipating a sustained growth rate of 15% per year. Is it possible for them to achieve this growth rate given the following numbers. Debtequity ratio of 0.40 times Profit margin is 5.3 percent Capital Intensity Ratio is 0.75 times To answer: determine what the dividend payout ratio must be. How do you interpret the result? no excel plz
- This is the full question Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20% per year for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5%. The most recent annual dividend was DIV0 = $1 per share. Compute the value of Better Mousetraps for assumed sustainable growth rates of 6% through 9%, in increments of 0.5% and compute the percentage change in the value of the firm for each 1 percentage point increase in the assumed final growth rate, g. (Do not round intermediate calculations. Round your answers to 2 decimal places.)Your company has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 43.50% this year, 24.50% next year, after which growth should match the 6.00% industry average growth rate, which is a more sustainable rate. The last dividend paid (D0) was $1.40 and your firm's WACC is 12.54%. What is the value per share of your firm's stock?a. critically discuss five benefits of finincial management to a small computer firm. b. Never say die Ltd has been growing at a phenomenal rate of 20% per year because of its rapid extension and explosive sales. analysts believe that this growth rate will last for three years and then drop to 5% per annum. if the growth rate then remains 5% indefinitely, what is the value of Never say die Ltd shares? if the dividend paid last year per share was 12 ghana cedis and the cost of capital is 15%. c. pure juice Ltd sold bonds to the public five years ago to finance its operation.the bond was recntly quoted at 89% of face value. the bond has a total face value of 8.5million ghana cedis and its currently priced to yield 9%. pure juice Ltd shares currentlysell for 14ghana cedis per share. fifty-three (53%) of pure juice Ltd 3.2 million shares are outstanding. to raise additional capital, pure juice Ltd issued 500 preference stock that paid 6.5 ghana cedis annually per share and sold for 95ghana…
- Your company has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 12.40% for the next 5 years, after which growth should match the 5.80% industry average growth rate, which is a more sustainable rate. The last dividend paid (D0) was $1.41 and your firm's WACC is 11.58%. What is the value per share of your firm's stock?12. Trend-line Inc. has been growing at a rate of 6% per year and is expected to continue to do so indefinitely. The next dividend is expected to be $5 per share. a. If the market expects a 10% rate of return on Trend-line, at what price must it be selling? b. If Trend-line's earnings per share will be $8, what part of Trend-line's value is due to assets in place, and what part to growth opportunities?2. If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growthwould be 100%, but the annual growth rate would be less than 10%. True or false? Explain. (Hint: Solve for the interest rate. Make sure you put the PV or FV as a negative number.)
- Your company has just successfully completed some work that leads you to expect that its earnings and dividends will grow at a rate of 49.50% this year, 25.50% next year, after which growth should match the 5.80% industry average growth rate, which is a more sustainable rate. The last dividend paid (D0) was $1.03 and your firm's WACC is 11.27%. What is the value per share of your firm's stock?Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly—at a rate of 40% per year—during Years 4 and 5, but after Year 5, growth should be a constant 9% per year. If the required return on Computech is 13%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent. $Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, DO, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock? $26.77 $27.89 $29.05 $30.21 $31.42