CK Company stockholders expect to receive a year-end dividend of $5 per share and then be sold for $115 dollars per share. If the required rate of return for the stock is 20%. Required: Calculate the current value of the stock

CK Company stockholders expect to receive a year-end dividend of $5 per share and then be sold for $115 dollars per share. If the required rate of return for the stock is 20%. Required: Calculate the current value of the stock

Name: CK Company stockholders expect to receive a year-end dividend of $5 pe
Uploaded: 2024-03-20T06:51:32.000Z
Channel: Bartleby
Description: CK Company stockholders expect to receive a year-end dividend of $5 per share and then be sold for $115 dollars per share. If the required rate of return for the stock is 20%. Required: Calculate the current value of the stock.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Deluxe Company expects to pay a dividend of $2 per share at the end of year 1. $3 per share at the end of year 2. and then be sold for $32 per share at the end of year 2. If the required rate of return on the stock is 15%, what is the current value of the stock?
Backyard Company is expected to pay a dividend of $L4 per share in the coming year. The required rate of return on the share is equal to 12% and dividends are expected to grow at the rate of 4% per year. Calculate the current value (price) of the stock. Note: Include two decimal points in your answer. Answer: Give your reasons
Gen Lab is expected to pay out a dividend of $0.75 per share in one year. The expected stock price in one year is $42 per share and the required return on the stock (also known as the cost of equity or the equity cost of capital) is 12%. What is the value of the stock today? Round your answer to two decimal places. Your Answer:
You buy a share of Damanpour Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1149, and $1.2250 in Years 1, 2, and 3 respectively. You also expect to sell the stock at a price of $26.22 at the end of three years. a. Calculate the growth rate in dividends. b. Calculate the expected dividend yield. c. Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to determine the expected total rate of return. What is this stock's expected total rate of return?
Best Corporation is expected to pay $.60 next year and $1.10 the following year and $1.25 each year thereafter. If the required return is .14, what is the priice of the stock? $7.40 $2.95 $8.24 $2.22
Genius Lab is expected pay $1 dividend per share at the end of the year. The dividend will grow 50% the following year (i.e., $1.5 is the second year dividend), then at 4% thereafter. If the required return for Genius Lab s is 7.5%, what is the intrinsic value of the stock? Round your answer to two decimal places.
You are considering whether to purchase a company's stock. The stock is expected to pay two dividends, $1.50 at the end of year 1 and $1.75 at the end of year 2. The expected selling price of the stock is $17.50 at the end of year 2. If you require a rate of return of 16% per year for the investment, what is the maximum price that you are willing to pay per share? Select one: a. $14.61 b. $15.49 C. $14.51 d. $15.60 e. $14.17
A share of stock will pay a dividend of $25 in one year, and will be sold for an expected price of $500 at that time. If the current one-year interest rate is 5%, what will be the current price of the stock?
Super Computer Company's stock is selling for OR 70 per share today. It is expected that, at the end of the first and second year, it will pay a dividend of OR4 and OR5 respectively. Then, the share will be sold for OR 85 per share. Calculate the expected rate of return for the shareholders.
You have just purchased a share of stock for $21.11. The company is expected to pay a dividend of $0.53 per share in exactly one year. If you want to earn a 10.2% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend?
You have just purchased a share of stock for $ 21.41. The company is expected to pay a dividend of $0.72 per share in exactly one year. If you want to earn a 9.4% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $________? (Round to nearest cent)
river stock plans to pay dividends of $1.36, 1.15, $1.35, and $1.62 at the end of the next four years, respectively. After that, the company will be sold and shareholders are expected to receive $82.40 per share in year 6 when the sale should be finalized. If the required return is 11.4 percent, what is the current value of one share of this sock? $46.50 $51.08 $47.29 $47.71 $51.87