Assume Highline Company has just paid an annual dividend of $1.01. Analysts are predicting an 10.3% per year growth rate in earnings over the next five years. After then, Highline's earnings areexpected to grow at the current industry average of 5.1% per year. If Highline's equity cost of capital is 8.2% per year and its dividend payout ratio remains constant, for what price doesthe dividend-discount model predict Highline stock should sell?The value of Highline's stock is $(Round to the nearest cent.)

The dividend-discount model (DDM), a technique used in finance to assess a company's stock.…

Answered: Assume Highline Company has just paid…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume Gillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.5% per year thereafter until the 6th year. Thereafter, growth will level off at 2.3% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.4%? The value of Gillette's stock is $ (Round to the nearest cent.)
Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 3.20% per year. The risk-free rate (rRFrRF) is 4.00%, the market risk premium (RPMRPM) is 4.80%, and Portman’s beta is 2.00. What is the dividents one year from now? What is the Horizon value? What is the Intrinsic value?
Assume Highline Company has just paid an annual dividend of $1.04. Analysts are predicting an 11.3% per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.5% per year. If Highline's equity cost of capital is 8.1% per year and its dividend payout ratio remains constant, for what price does the dividend - discount model predict Highline stock should sell? The value of Highline's stock is $. (Roun to the nearest cent.) Assume Highline Company has just paid an annual dividend of $1.04. Analysts are predicting an 11.3% per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.5% per year. If Highline's equity cost of capital is 8.1% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell? The value of Highline's stock is $…
According to the dividend discount model, what is the value of a share of Bull DogPretzels stock today if the firm’s cost of equity capital is 9.0%? How is the answer 15.02? What is the fastest way doing by hands?
4. The dividends that Firm A pays to its stockholders are expected to grow at 18% a year for the next nine years. From t=9 onwards, the growth rate in dividends will drop to 13.5% per year, and the firm expects to be able to sustain it at this level. Assuming that the market capitalization rate is 18% a year, work out the value of the firm assuming that the dividend expected to be paid at t=1 is $4.50.
Give typing answer with explanation and conclusion A company is expected to maintain its dividend payout ratio of 70% in the long term. The earnings per share of the company are expected to be $1.575 next year. Earnings are expected to grow at a constant rate of 5% per year. The current risk-free rate is 1%, the implied equity risk premium is 7.0%, and the estimated beta of the firm is 2.10. If the firm is currently trading in the market at a P/E of 13.5, which of the following statements is correct A) firm correctly priced B) firm overvalued C) firm undervalued
News Corp is expected to pay a dividend of $0.8 in one year. The dividend is expected to grow at 12% in the following 3 years and then at a constant rate of 4% per annum indefinitely. If the required rate of return is 12%, what is the price of the company's share today? Please illustrate your answer using a timeline.
Suppose the dividends for the Seger Corporation over the past six years were $1.40, $1.48, $1.57, $1.65, $1.75, and $1.80, respectively. Assume that the historical (arithmetic) average growth rates will remain the same for 2022. Compute the expected share price at the end of 2022 using the perpetual growth method. Assume the market risk premlum is 11.7 percent, Treasury bills yield 5.9 percent, and the projected beta of the firm is 0.88. Note: Do not round Intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Share price S 1.80
colgate palmolive Company has just paid an annual dividend of $1.57. Analysts are predicting dividends to grow by $0.17 per year over the next 5 years. After then, 's earnings are expected to grow 3.6% per year, and its dividend payout rate will remain constant. If's equity cost of capital is 7.4% per year, what price does the dividend-discount model predict colgate stock should sell for today? What is the price per share?
Assume Highline Company has just paid an annual dividend of $1.04. Analysts are predicting an 11.5% per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 4.8% per year. If Highline's equity cost of capital is 7.8% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell? The value of Highline's stock is $ (Round to the nearest cent.) ...
use excel and explain why
The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 8% per year in the future. Shelby's common stock sells for $30 per share, its last dividend was $1.50, and the company will pay a dividend of $1.62 at the end of the current year. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. % If the firm's beta is 1.8, the risk-free rate is 10%, and the expected return on the market is 12%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 10%, then what would be your estimate of rs using the own-bond-yield-plus-judgmental-risk-premium approach? (Hint: Use the mid-point of the risk premium range.) Round your answer to two decimal places. % On the basis of the results of parts a–c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally. Round your answer…

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