6. Dividend discount model (S4.3) Company X is expected to pay an end-of-year dividend of $5 a share. After the dividend, its stock is expected to sell at $110. If the cost of equity is 8%, what is the current stock price?
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- A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years and then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock’s current price?The Cost of Equity and Flotation Costs Messman Manufacturing will issue common stock to the public for $30. The expected dividend and the growth in dividends are $3.00 per share and 5%, respectively. If the flotation cost is 10% of the issue’s gross proceeds, what is the cost of external equity, re?Answer the following questions using the dividend discount model to value stock. Part A (5 points) - The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. Francis' cost of equity is 10.33%. What is the company's current stock price?
- 8. Dividend discount model Company X is expected to pay an end-of-year dividend of $5 a share. After the dividend, its stock is expected to sell at $110. If the market capitalization rate is 8%, what is the current stock price?1. An analyst estimates that a stock will pay a $1 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 14%, what is the value of the stock? A. $34.60. B. $35.52. C. $35.96. Please provide an accurte answer.Suppose a firm issues a dividend of $10.00 per share and plans to issue a constant dividend of $2.00 per share starting from year 1. What is the stock price of the firm's common share? Suppose the discount rate is 9% (rounded to the 2nd decimal place in a percentage) (eg, 33.33%) ubmit. Click Save
- For Company ABC, if stock price P0 = $30; dividend paid at the end of period 1 D1 = $3.00; growth rate g = 5%; What’s the required rate of return for equity holder rs = ? If the flotation cost F = 10%; What’s the required rate of return for equity holder rs = ?3. What is the intrinsic value of a share of stock if expected dividends are $8/share and the expected price year is $90/share? Assume a discount rate of 10%. What is the expected return and what should be the decision from an investor?. in 1A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $2 per share and sells for $57. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $43. What are the dividend yield and percentage capital gain in this case?
- 1. An analyst estimates that a stock will pay a $1 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 14%, what is the value of the stock? A. $34.60. B. $35.52. C. $35.96.A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $56. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case? A Required What is the total rate of return for the stock? B Required What is the dividend yield and percentage capital gain? C Required Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case? (Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.)The Evanec Company's next expected dividend, D1, is $3.08; its growth rate is 4%; and its common stock now sells for $39.00. New stock (external equity) can be sold to net $31.20 per share. a. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. rs b. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F = % c. What is Evanec's cost of new common stock, re? Do not round intermediate calculations. Round your answer to two decimal places. re = %