You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the next 3 years. You believe the stock will sell for $20.00 at the end of the third year. What is the stock price if the cost of capital for the stock is 10%?

You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the next 3 years. You believe the stock will sell for $20.00 at the end of the third year. What is the stock price if the cost of capital for the stock is 10%?

Name: You expect a share of stock to pay dividends of $1.00, $1.25, and $1.5
Uploaded: 2024-03-20T06:51:32.000Z
Channel: Bartleby
Description: You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the next 3 years. You believe the stockwill sell for $20.00 at the end of the third year. What is the stock price if the cost of capital for the stock is 10%?

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 2P

See similar textbooks

Similar questions

You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the next 3 years. You believe the stock will sell for $20 at the end of the third year. a. What is the stock price if the discount rate for the stock is 10%? (Round your answer to the nearest cents) b. What is the dividend yield? (Round your answer 2 decimal places)
You expect a share of stock to pay dividends of $1.30, $1.55, and $1.60 in each of the next 3 years. You believe the stock will sell for $22.00 at the end of the third year. a. What is the stock price if the discount rate for the stock is 20%? b. What is the dividend yield for year 1? c. What will be the dividend yield at the start of year 2?
You purchase a stock for $50 per share today. It will pay a dividend of $1.75 next month. If you can sell it for $65 right after the dividend is paid, what is the dividend yield? What is the capital gain? What is the rate of return?
You are investing in a share of stock. The share will pay a dividend of $6.4 at the end of the first year. The dividend is expected to grow forever at a rate of 3.89% per year. You require a 11% rate of return on the stock investment. What is a fair price (or, value) for this share of stock? To nearest $0.01
Suppose the current price of a stock is $50 per share. You expected to earn a 10% return on the stock if you buy it at the current market price and hold it for one year (right after you receive the dividend for the year). The stock is expected to pay a dividend of $2.5 per share, what do you expect the stock price to be one year from now? • Suppose the current price of a stock is $50 per share. You expected to earn a 10% return on the stock if you buy it at the current market price and hold it for one year (right after you receive the dividend for the year). The stock one year from now is expected to be $53, how much dividend do you expect to receive during the year .
You are thinking about buying a stock and holding it for 2 years. You expect that the stock will pay a dividend of $0.98 in 1 year and $3.57 in two years. You expect to sell for $105.74 in 2 years. If the required return is 14.10%, what is the value of the stock.
You are thinking about buying a stock and holding it for 3 years. You expect that the stock will pay a dividend of $0.57 in 1 year, $2.95 in two years, and $4.07 in three years. You expect to sell for $74.66 in 3 years. If the required return is 14.83%, what is the value of the stock.
You expect a share of stock to pay dividends of $1.60, $2.25, and $2.50 in each of the next 3 years. You believe the stock will sell for $25.00 at the end of the third year. a. What is the stock price if the discount rate for the stock is 10%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the dividend yield for year 1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What will be the dividend yield at the start of year 2? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
A share of stock will pay a dividend of $25 in one year, and will be sold for an expected price of $500 at that time. If the current one-year interest rate is 5%, what will be the current price of the stock?
You expect a share of EconNews.Com to sell for $69 a year from now. If you are willing to pay $70.09 for one share of the stock today, and you require a return of 7 percent, what dividend payment must you expect to receive from the stock?
Suppose Acap Corporation will pay a dividend of $2.73 per share at the end of this year and $2.95 per share next year. You expect Acap's stock price to be $50.38 in two years. Assume that Acap's equity cost of capital is 10.6%. a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years? b. Suppose instead you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Acap stock in one year? c. Given your answer in (b), what price would you be willing to pay for a share of Acap stock today if you planned to hold the stock for one year? How does this compare to your answer in (a)?
You expect a stock to pay annual dividends of $1.39, $1.16, and $1.87 in each of the next three years, with the first dividend payment occurring one year from today. You also expect a stock price of $33.19 immediately after the stock pays the third annual dividend (i.e., exactly three years from today). If the stock's required rate of return is 6%, what is a fair price for the stock today? Round your answer to the nearest penny: Type your answer.....