Firm Z paid a dividend of $2.67 per share this morning. Dividends are expected t
ID: 2660632 • Letter: F
Question
Firm Z paid a dividend of $2.67 per share this morning. Dividends are expected to grow at an annual rate of 4.3% per year forever. What is the amount of the dividend that will be paid 6 years from now? Round your answer to the nearest cent.
Firm B paid a dividend of $2.32 per share this morning. Dividends are expected to grow at an annual rate of 10% per year for the next 3 years. After that, dividends will grow at 2.4% per year forever. What is the amount of the dividend that will be paid 8 years from now? Round your answer to the nearest cent.
Firm M intends to pay a dividend of $3.24 per share at the end of the year, $2.14 per share two years from now and $1.86 per share three years from now. If the required return on the stock is 8.1%, what is the net present value (i.e., sum of the present values) of these dividends? Round your answer to the nearest cent.
Firm A has always paid a common stock dividend of $2.38 per share each year. They intend to continue paying the same dividend each year forever. If the stock's required return is 12.8%, what is the price per share today? Round your answer to the nearest cent.
Explanation / Answer
Firm Z paid a dividend of $2.67 per share this morning. Dividends are expected to grow at an annual rate of 4.3% per year forever. What is the amount of the dividend that will be paid 6 years from now? Round your answer to the nearest cent.
Solution: D0= 2.67
D6 = 2.67*(1+4.3%)^6 =$3.44
Firm B paid a dividend of $2.32 per share this morning. Dividends are expected to grow at an annual rate of 10% per year for the next 3 years. After that, dividends will grow at 2.4% per year forever. What is the amount of the dividend that will be paid 8 years from now? Round your answer to the nearest cent.
Solution:
D0= 2.32
D8 = 2.32*(1+10%)^3*(1+2.4%)^5 = $3.48
Firm M intends to pay a dividend of $3.24 per share at the end of the year, $2.14 per share two years from now and $1.86 per share three years from now. If the required return on the stock is 8.1%, what is the net present value (i.e., sum of the present values) of these dividends? Round your answer to the nearest cent
Solution:
net present value of these dividends = 3.24/(1+8.1%) + 2.14/(1+8.1%)^2 + 1.86/(1+8.1%)^3 =$6.30
Firm A has always paid a common stock dividend of $2.38 per share each year. They intend to continue paying the same dividend each year forever. If the stock's required return is 12.8%, what is the price per share today? Round your answer to the nearest cent.
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