Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- a. If your required rate of return is 7.60percent, what is the value of the stock for you? b. Should you make the investmentarrow_forwardA stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it should continue to grow at a constant rate of 5% a year. If its required return is 12%, what is the stock's expected price 4 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. $arrow_forwardYou are considering the purchase of a stock that yesterday announced EPS of $6.24. You feel that earnings will grow at 23% for the next three years. After that growth in earnings should level-off to 3% per year into the future. You require a return of 13%. Based on these assumptions, what would you pay for the stock today? $105.12 $141.83 $95.59 $119.50arrow_forward
- A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $59. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $44. What are the dividend yield and percentage capital gain in this case?arrow_forwardA stock just paid $2.7 dividend yesterday. The dividend is expected to grow at 3.4% per year thereafter. If the required rate of return of the stock is 10.5%, then using the dividend discount model, the stock price should be _______. (Round your answer to two decimal places, such as 12.34).arrow_forwardA stock is expected to pay a dividend of $1.99 at the end of the year. The required rate of return is rs = 13.82%, and the expected constant growth rate is g = 8.0%. What is the stock's current price?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. A. $39.61 B. $29.71 C. $34.14 D. $42.68 E. $35.51arrow_forward
- A stock is expected to pay a dividend of $2.25 at the end of the year (i.e., D1 = $2.25), and it should continue to grow at a constant rate of 3% a year. If its required return is 13%, what is the stock's expected price 3 years from today?arrow_forwardA stock is expected to pay a dividend of $2.33 at the end of the year. The required rate of return is rs = 21.0%, and the expected constant growth rate is g = 6.0%. What is the stock's current price?arrow_forwardA stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price? a. $17.39 b. $17.84 c. $18.29 d. $18.75 e. $19.22arrow_forward
- A stock has a required rate of return of 13.99%, and it sells for $24.02 per share. The dividend is expected to grow at a constant rate of 1.6% per year. What is the expected dividend? (Round your answer to 2 decimal places)arrow_forward(Common stock valuation) The common stock of NCP paid $1.35 in dividends last year. Dividends are expected to grow at an annual rate of 9.50 percent for an indefinite number of years. a. If your required rate of return is 11.60 percent, what is the value of the stock for you? b. Should you make the investment? a. If your required rate of return is 11.60 percent, the value of the stock for you is $ (Round to the nearest cent.)arrow_forwardYou are considering an investment in the common stock of Keller Corp. The stock is expected to pay a dividend of $2 a share at the end of the year (D1=$2.00). The stock has a beta equal to 0.9. The risk-free rate is 5.6 percent, and the market risk premium is 6 percent. The stock’s dividend is expected to grow at some constant rate g. The stock currently sells for $25 a share. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?)arrow_forward
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