Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a divid

Question

Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $15 at the end of each year. The preferred sells for $85 a share. What is the stock’s required rate of return?

You are analyzing Jillian’s Jewlery (JJ) stock for a possible purchase. JJ just paid a dividend of $2.25 yesterday. You expect the dividend to grow at the rate of 5% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years and then sell it.

JJ stock should trade for $25.00 3 years from now (i.e., you expect P3^ = $25.00). Discounted at a 10% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $25.00.

$12.5
0

You are analyzing Jillian’s Jewlery (JJ) stock for a possible purchase. JJ just paid a dividend of $2.25 yesterday. You expect the dividend to grow at the rate of 5% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years and then sell it.

If you plan to buy the stock, hold it for 3 years, and then sell it for $25.00, what is the most you should pay for it? Assume a cost of capital of 10%.

Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 5% rate. Dozier’s weighted average cost of capital is WACC = 12%. What is the current value of operations for Dozier?

$713.33

You are analyzing Jillian’s Jewlery (JJ) stock for a possible purchase. JJ just paid a dividend of $1.50 yesterday. You expect the dividend to grow at the rate of 6% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years and then sell it.

JJ’s stock has a required return of 13% and so this is the rate you’ll use to discount dividends. Find the present value of the dividend stream; that is, calculate the PV of D1, D2, and D3, and then sum these PVs.

15.00% 5.88% 30.00% 17.65% 10.00%

Explanation / Answer

1) stock’s required rate of return is
                                           =dividend/preferred sells

                                          =15/85=17.65%

so, the Answer is D)17.65

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