18 - The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which is approximates its intrinsic value. The company has announced plans to maintain its dividend next year at $1.20 per share.  Your research indicates that historically, the firm's dividend payout ratio has averaged 50% while its return on equity averaged 9.0%.  The book value of the shares is $25.00 and research shows there is relatively low variation in the firm's operations.  You believe the firm's payout ratio and ROE should continue at their historic levels in the future over the long term.  Enter your answers on the spreadsheet Estimate the firm's PE multiple over the long term based on the absolute approach and round to 2 decimals.               PE multiple:

Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $64.13. The firm just recently paid a dividend of $3.99. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.03. After underpricing and flotation costs, the firm expects to net $55.79 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth rate, what dividend would you expect the company to pay next year? b. Determine the net proceeds, N₁, that the firm will actually receive. c. Using the constant-growth valuation model, determine the required return on the company's stock, rs, which should equal the cost of retained earnings, rr. d. Using the constant-growth valuation model, determine the cost of new common stock, In- C--- a. The average annual dividend growth rate over the past 5 years is %. (Round to two decimal places.)

ABC Corporation stock currently sells for $80.58 per share. The market requires a return of 12.9 percent on the firm's stock. If the company maintains a constant 3.26 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? Answer to two decimal places. C

14 -The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which is approximates its intrinsic value. The company has announced plans to maintain its dividend next year at $1.20 per share.  Your research indicates that historically, the firm's dividend payout ratio has averaged 50% while its return on equity averaged 9.0%.  The book value of the shares is $25.00 and research shows there is relatively low variation in the firm's operations.  You believe the firm's payout ratio and ROE should continue at their historic levels in the future over the long term.  Enter your answers on the spreadsheet.  Calculate the dividend yield of the firm's shares based on the announced dividend and rounded to 2 decimals:         Dividend Yield: