A company plans to issue a dividend next year (t = 1) for $3 per share, another dividend the year after (t = 2) for $4 per share, and another dividend after that ( t = 3) for $2 per share. The dividends are expected to increase at the constant growth rate of 5% after the third year. If shareholders require a return of 8%, what is this company's price per share today (t = 0)? $63.36
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- Whizcom Inc. is expected to pay a dividend of $1 next period. Dividends are expected to grow at 2% per year and the investors require a return of 12%. i) Compute the current stock price for Whizcom Inc.ii) What would be the likely stock price in year 5?iii) What would be per annum rate of return implied by a change in prices from time 0 to time 5?grey manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D1=$1.25). The stock sells fo $27.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?Show Detailed Steps When Solving The Following Question: Gordon Growth Company is expected to pay a dividend of $4 next period, and dividends are expected to grow at 6% per year. The required return is 16%. What is the current price? What is the price expected to be in year 4?
- Harmony Corporation will pay a dividend of RM1.50 a share next year. After this, earnings and dividends are expected to grow at a 9% annual rate indefinitely. Investors currently require a rate of return of 13%. The company is considering the following two business strategies and wishes to determine the effect of these strategies on the market price per share of its stock. Strategy 1: Continuing the present strategy will result in the expected growth rate and required rate of return stated above. Strategy 2: Expanding Harmony Corporation sales will increase the expected dividend growth rate to 11% but will increase the risk of the company. As a result, the rate of return required by investors will increase to 16%. From the standpoint of market price per share, which strategy is better? Show relevant workings to support your answer.XYZ is expected to pay 30.06 dividend next year. The dividend is expected to grow at 50% per annum in the 2nd and the 3rd year, at 20% per annum in the 4th and 5th year, and at 5% p.a. thereafter. If the required rate of return is 12 %, what is the value per share?Suppose TB Pirates, Inc. is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year and the required return is 15%, what is the price? Respuesta:
- Spencer Supplies’ stock is currently selling for $60 a share. The firm is expected toearn $5.40 per share this year and to pay a year-end dividend of $3.60.a. If investors require a 9% return, what rate of growth must be expected forSpencer? If Spencer reinvests earnings in projects with average returns equal to thestock’s expected rate of return, what will be next year’s EPS? [Hint: g ROE(Retention ratio).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 $8 per share. a. If the market expects a 10% rate of return on Trend-Line, at what price must it be selling? (Do not round intermediate calculations.) Current selling priceSuppose the Pale Hose Corp. is expected to pay a dividend next year of OMR2.25 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 20% for the following 2 years and then at 5% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 15%, what is the value of a share of Pale Hose?
- 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 $8 per share. a. If the market expects a 10% rate of return on Trend-Line, at what price must it be selling i.e. Current selling price?Suppose TB Pirates, Inc. is expected to pay a $2dividend in one year. If the dividend is expected togrow at 5% per year and the required return is 20%,what is the price?News Corp is expected to pay a dividend of $0.8 in one year. The dividend is expected to grow at 12% in the following 3 years and then at a constant rate of 4% per annum indefinitely. If the required rate of return is 12%, what is the price of the company's share today? Please illustrate your answer using a timeline.