Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Assume that Stock X is fairly priced today. Stock X just distributed a per share dividend of $1. It is expected that the company will increase its dividend by 20% in the coming year, 15% in the second year, 10% in the third year, and 5% in the fourth year. Starting from the fifth year, the company will maintain the dividend growth rate to be 5% per year forever. How much is Stock X worth today if its equity cost of capital is 10%? With clear calculation and formulaarrow_forwardA company just paid a $1.60 per share annual dividend. The company is planning on paying $1.80, $1.95, $2.05, and $2.20 a share over the next 4 years, respectively. After that, the dividend will be a constant $2.25 per share per year. What is this stock worth to you per share if you require a 8.50% rate of return? Options $24.97 $25.61 $26.25 $26.89 $27.53arrow_forwardParcel Corporation expects to pay a dividend of $5.15 per share next year, and the dividend payout ratio is 50 percent. If dividends are expected to grow at a constant rate of 8 percent forever, and the required rate of return on the stock is 13 percent, calculate the present value of growth opportunities. Multiple Choice O O O $103.00 $79.23 $23.77 $71.85arrow_forward
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