The Stopperside Wardrobe Co. Just paid a dividend of $1.69 per share on Its stock. The dividends are expected to grow at a constantrate of 7.2% per year indefinitely. If Investors require an 12.2% return on The Stopperside Wardrobe Co. stock, answer the following:(Do not round Intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)What is the current price?Current price$What will the price be in three years?Stock price in three yearsWhat will the price be in 15 years?Stock price in 15 years$

Dividend is return on investment which were made by shareholders. There are two types of…

Answered: The Stopperside Wardrobe Co. Just paid…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.90 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 10 percent on the company's stock. a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the stock price be in 5 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Current price b. Stock price in 3 years c. Stock price in 5 years
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.60 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 10 percent on the company's stock. a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the stock price be in 12 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Arondale Aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock pays a quarterly dividend of $3, and its current price is $100. A. What is its nominal annual rate of return? Do not round your intermediate calculations. Round your answer to two decimal places. B. What is its effective annual rate of return? Do not round your intermediate calculations. Round your answer to two decimal places.
The Starr Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely. Investors require an 11 percent return on the stock. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current price? Current price $ What will the price be in three years? Stock price $ What will the price be in 14 years? Stock price $
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 4% per year. Callahan's common stock currently sells for $26.75 per share; its last dividend was $2.50; and it will pay a $2.60 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % b. If the firm's beta is 2.0, the risk-free rate is 8%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % c. If the firm's bonds earn a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. % d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost…
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 4% per year. Callahan's common stock currently sells for $26.75 per share; its last dividend was $2.00; and it will pay a $2.08 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % b. If the firm's beta is 1.5, the risk-free rate is 4%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % c. If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rg? Use the judgmental risk premium of 4% in your calculations. Round your answer to two decimal places. d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Do not round…
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 6% per year. Callahan's common stock currently sells for $27.25 per share; its last dividend was $2.00; and it will pay a $2.12 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. If the firm's beta is 0.6, the risk-free rate is 5%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. If the firm's bonds earn a return of 10%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common…
An investor bought a stock for $15 (at t=0) and one year later it paid a $1 dividend (at t=1). Just after the dividend was paid, the stock price was $7 (at t=1). Inflation over the past year (from t=0 to t=1) was -6% pa (note the negative sign), given as an effective annual rate. Which of the following statements is NOT correct? All answer options are rounded to 6 decimal places. The stock investment produced a: Question 2Select one: a. Nominal capital return of -46.666667% pa. b. Nominal total return of -46.666667% pa. c. Real capital return of -50.35461% pa. d. Real income return of 7.092199% pa. e. Real total return of -43.262411% pa.
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $22.75 per share; its last dividend was $2.00; and it will pay a $2.16 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. __ % If the firm's beta is 1.5, the risk-free rate is 3%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. __ % If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the judgmental risk premium of 4% in your calculations. Round your answer to two decimal places. ___ % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Do…
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 3% per year. Callahan's common stock currently sells for $22.75 per share; its last dividend was $2.00; and it will pay a $2.06 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % If the firm's beta is 1.6, the risk-free rate is 3%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. %
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 4% per year. Callahan's common stock currently sells for $28.00 per share; its last dividend was $2.50; and it will pay a $2.60 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %
A speculator sells a stock short for $71 a share. The company pays a $2.50 annual cash dividend.After a year has passed, the seller covers the short position at $63. If the margin requirement is55 percent, what is the percentage return earned on the investment? Redo the calculations, assuming the price of the stock is $78 when the investor closes theposition. Based on your calculations to both scenarios, what generalization can be inferred?

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