Firm K will pay a common stock dividend of $1.2 per share one year from now. The
ID: 2660633 • Letter: F
Question
Firm K will pay a common stock dividend of $1.2 per share one year from now. They intend to grow the dividend by 4% each year forever. If the stock's required return is 6.8%, what is the price per share today? Round your answer to the nearest cent.
Firm K paid a common stock dividend of $3.13 per share this morning. They intend to grow the dividend by 1% each year forever. If the stock's required return is 6.1%, what is the price per share today? Round your answer to the nearest cent.
The next dividend payment by Firm C will be $1.84 per share. The dividends are anticipated to maintain a 1.5 percent growth rate, forever. If the stock currently sells for $49.55 per share, what is the required return? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).
Firm S stock currently sells for $21.33 per share. The market requires a 12 percent return on the firm's stock, and the dividend to be paid one year from now is $1.86. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).
Firm T stock currently sells for $51.47 per share. The market requires a 11 percent return on the firm's stock, and the most recent annual dividend per share was $2.02. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).
Explanation / Answer
Firm K will pay a common stock dividend of $1.2 per share one year from now. They intend to grow the dividend by 4% each year forever. If the stock's required return is 6.8%, what is the price per share today? Round your answer to the nearest cent.
Solution- price per share today= D1/(r-g) = 1.2/(6.8%-4%) =$42.86
Firm K paid a common stock dividend of $3.13 per share this morning. They intend to grow the dividend by 1% each year forever. If the stock's required return is 6.1%, what is the price per share today? Round your answer to the nearest cent.
Solution : price per share today = D1/(r-g) = 3.13*(1+1%)/(6.1%-1%) =$61.99
The next dividend payment by Firm C will be $1.84 per share. The dividends are anticipated to maintain a 1.5 percent growth rate, forever. If the stock currently sells for $49.55 per share, what is the required return? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).
Solution-
P= D1/(r-g)
49.55 = 1.84/(r-1.5%)
required return, r= 5.2134%
Firm S stock currently sells for $21.33 per share. The market requires a 12 percent return on the firm's stock, and the dividend to be paid one year from now is $1.86. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).
Solution: P= D1/(r-g)
21.33 = 1.86/(12%-g)
growth rate. g= 3.2799%
Firm T stock currently sells for $51.47 per share. The market requires a 11 percent return on the firm's stock, and the most recent annual dividend per share was $2.02. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).
Solution: P= D1/(r-g)
51.47 = 2.02*(1+g)/(11%-g)
5.6617 - 51.47g = 2.02 + 2.02g
g= 6.8082%
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