a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate o return do Nogro's investors require? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return % b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.

a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate o return do Nogro's investors require? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return % b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 15P: Return on Common Stock You buy a share of The Ludwig Corporation stock for $21.40. You expect it to...

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Return on Common Stock You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years. Calculate the growth rate in dividends. Calculate the expected dividend yield. Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock’s expected total rate of return (assume the market is in equilibrium with the required return equal to the expected return)?
20- Assume that a company will distribute $2.5 dividend at the end of the year and the required rate of return on the stock is 10 percent. What is the fair price of the stock if the sustainable growth rate of dividends is 6 percent? $62.5 $26.5 $41.67 $66.25 $25.0
Question 15 Lightscape FX, an exterior landscape lighting company, paid an annual dividend of R1,42 a share last month. The company plans to pay R1,50, R1,75 and R1,80 a share over the next three years respectively. After that, the dividend will be constant at R2 per share per year. What is the market price of this stock if the market rate of return is 10,50%? 1. R18,24 2. R19,66 3. R22,17 4. R25,11
QUESTION 3Consider a company whose stock is trading at Ghc120 per share. This company requires a 10% minimum rate of return and will pay a Ghc5 dividend per share next year, which is expected to increase by 7% annually. What is the intrinsic value if this stock? Should it be bought or sold?
Problem 18-8 Computer stocks currently provide an expected rate of return of 19%. MBI, a large computer company, will pay a year-end dividend of $2.60 per share. a. If the stock is selling at $56 per share, what must be the market's expectation of the dividend growth rate? (Round your answer to 2 decimal places.) Growth rate
Problem 18-13 The risk-free rate of return is 5.5%, the expected rate of return on the market portfolio is 13%, and the stock of Xyrong Corporation has a beta coefficient of 2.9. Xyrong pays out 45% of its earnings in dividends, and the latest earnings announced were $8.00 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 15% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value b. If the market price of a share is currently $14, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected one-year holding-period return
17 NU YU announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $.33 a share. The following dividends will be $.38, $.53, and $.83 a share annually for the following three years, respectively. After that, dividends are projected to increase by 2.6 percent per year. How much are you willing to pay today to buy one share of this stock if your desired rate of return is 9 percent? 03:28:13 Multiple Choice O $13.31 $2.76 $13.65 $11.05 $13.64
Question 17 You must estimate the value of Kendra Enterprises’ entire share. The free cash flow (FCF) at the end of the year is expected to be R25 000 000 and it is expected to grow at a constant rate of 8,50% a year thereafter. The company’s weighted average cost of capital (WACC) is 11%. The company has a R200 000 000 of long-term debt plus preferred shares, and there are 30 000 000 shares of ordinary shares are outstanding. What is company's estimated value per share of ordinary shares? 1. R22,67 2. R24,00 3. R25,33 4. R26,67
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Problem 9.27 Staggert Corp. will pay dividends of $5.00, $6.25, $4.75, and $3.00 in the next four years. Thereafter, the company expects its dividend growth rate to be constant at 8.5 percent. If the required rate of return is 17.0 percent, what is the current value of the stock? (Round intermediate calculations and final answer to 2 decimal places, e.g. 16.25.) Current value Click if you would like to Show Work for this question: Open Show Work
Question 18 A share is trading at R606,82 per share. It is expected to have a year-end dividend of R8,50 per share and to grow at some constant rate throughout time. The share’s required rate of return is 11% (assume that the market is in equilibrium with the required return equal to the expected return). What is your forecast of the constant growth rate? 1. 2,29% 2. 6,59% 3. 9,60% 4. 12,23%
11. I need help with finance home work question asap please A stock that currently sells for $120 has EPS of $20.75. What is the annual rate of return on this stock if the company is expected to pay a dividend per share in the amount of $18 each year forever?