52-Week Price Dividend PE Close Hi Lo Stock (Dividend) Yield % Ratio Price Net Change 77.40 10.43 Acevedo .36 2.6 6 13.90 -.24 55.81 33.42 Georgette, Incorporated 1.54 3.8 10 40.43 -.01 130.98 69.75 YBM 2.25 2.5 10 89.02 3.07 50.24 13.95 Manta Energy .80 35.00 20.74 Winter Sports .32 5.2 1.5 6 15.43 -.26 28 ?? .18 cording to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20 percent. Suppose YBM growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent, indefinitely. Assum estors require a return of 15 percent on YBM stock. According to the dividend growth model, what should the stock price be te: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) urrent stock price

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
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Problem 15.1.3MBA: Financial leverage MicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern...
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52-Week Price
Dividend
PE
Close
Hi
Lo
Stock (Dividend)
Yield %
Ratio
Price
Net Change
77.40
10.43
Acevedo .36
2.6
6
13.90
-.24
55.81
33.42
Georgette, Incorporated 1.54
3.8
10
40.43
-.01
130.98
69.75
YBM 2.25
2.5
10
89.02
3.07
50.24
13.95
Manta Energy .80
35.00
20.74
Winter Sports 32
5.2
1.5
6
15.43
-.26
28
??
.18
According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20 percent. Suppose YBM meets
this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent, indefinitely. Assume
investors require a return of 15 percent on YBM stock. According to the dividend growth model, what should the stock price be today?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current stock price
Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?
Stock currently
Transcribed Image Text:52-Week Price Dividend PE Close Hi Lo Stock (Dividend) Yield % Ratio Price Net Change 77.40 10.43 Acevedo .36 2.6 6 13.90 -.24 55.81 33.42 Georgette, Incorporated 1.54 3.8 10 40.43 -.01 130.98 69.75 YBM 2.25 2.5 10 89.02 3.07 50.24 13.95 Manta Energy .80 35.00 20.74 Winter Sports 32 5.2 1.5 6 15.43 -.26 28 ?? .18 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20 percent. Suppose YBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent, indefinitely. Assume investors require a return of 15 percent on YBM stock. According to the dividend growth model, what should the stock price be today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued? Stock currently
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