Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)Stock priceCalculate the present value of these cash flows using a 13 percent discount rate. (Do not round intermediate calculations. Roundyour answer to 2 decimal places.)Present value Suppose that a firm's recent earnings per share and dividend per share are $2.55 and $1.40, respectively. Both are expected to growat 11 percent. However, the firm's current P/E ratio of 15 seems high for this growth rate. The P/E ratio is expected to fall to 11 within fiveyears.Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.)YearsFirst yearSecond yearThird yearFourth yearFifth yearDividends

Earnings per share = $2.55Dividends per share = $1.40Growth rate = 11%Expected PE ratio fall within…

Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price Calculate the present value of these cash flows using a 13 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places!

Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price Calculate the present value of these cash flows using a 13 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places!

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose that a firm's recent earnings per share and dividend per share are $3.05 and $2.40, respectively. Both are expected to grow at 8 percent. However, the firm's current P/E ratio of 25 seems high for this growth rate. The P/E ratio is expected to fall to 21 within five years. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.) Years First year Second year Third year Fourth year Fifth year Compute the value of this stock price in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price Dividends Calculate the present value of these cash flows using a 10 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value
Suppose that a firm's recent earnings per share and dividend per share are $3.05 and $2.40, respectively. Both are expected to grow at 8 percent. However, the firm's current P/E ratio of 25 seems high for this growth rate. The P/E ratio is expected to fall to 21 within five years. Compute the dividends over the next five years. (Do not round Intermediate calculations. Round your answers to 3 decimal places.) Fall Answer is complete and correct. Years First year Second year Third year Fourth year Fifth year Stock price $ S Present value $ $ S Dividends Compute the value of this stock price in five years. (Do not round Intermediate calculations. Round your answer to 2 decimal places.) 2.592 2.799 3.023 3.265 3.526 Answer is complete and correct. S 94.08 Calculate the present value of these cash flows using a 10 percent discount rate. (Do not round Intermediate calculations. Round your answer to 2 decimal places.) x Answer is not complete. h so far. It does not Indicate completion.
Suppose that a firm’s recent earnings per share and dividend per share are $2.60 and $1.60, respectively. Both are expected to grow at 10 percent. However, the firm’s current P/E ratio of 25 seems high for this growth rate. The P/E ratio is expected to fall to 21 within five years. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.) Compute the value of this stock in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Calculate the present value of these cash flows using a 12 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A firm pays a $13.80 dividend at the end of year one (D1), has a stock price of $149, and a constant growth rate (g) of 5 percent. Compute the required rate of return (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $21.25 per share; its last dividend was $1.80; and it will pay a $1.89 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 0.7, the risk-free rate is 4%, 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. % If the firm's bonds earn a return of 13%, 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 not…
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…
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 $21.75 per share; its last dividend was $1.50; and it will pay a $1.62 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 1.6, the risk-free rate is 8%, 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. % c. 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 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…
Suppose that a firm's recent earnings per share and dividend per share are $3.10 and $2.10, respectively. Both are expected to grow 7 percent. However, the firm's current P/E ratio of 30 seems high for this growth rate. The P/E ratio is expected to fall to 26 within five years. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places Years First year Second year Third year Fourth year Fifth year Dividends Compute the value of this stock in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 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…
A firm is expected to pay a dividend of $2.05 next year. In the next four years, dividends are expected to be $2.20, $2.40, $2.65, and $2.95, respectively. Financial analysts believe the stock will be at their price target of $140 in five years. Compute the value of this stock with a required return of 9 percent. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Value of stock
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. %

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