None (Common stock valuation) Gilliland Motor, Inc., paid a $3.84 dividend last year. If Gilliland's return on equity is 32 percent, and its retention rate is 23 percent, what is thevalue of the common stock if the investors require a rate of return of 18 percent?The value of the common stock is $(Round to the nearest cent.)

1. Rate of growth in dividends (g) = Return on equity * Retention rate.g = 32% * 23% = 7.36%. 2.…

Answered: (Common stock valuation) Gilliland…

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

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The Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. Compute the stock’s earnings per share (EPS). What is the stock’s P/E ratio? Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.
(Common stock valuation) Gilliland Motor, Inc., paid a $3.94 dividend last year. If Gilliland's return on equity is 15 percent, and its retention rate is common stock if the investors require a rate of return of 17 percent? percent, what is the value of the The value of the common stock is $ (Round to the nearest cent.)
Wayne, Inc.'s outstanding common stock is currently selling in the market for $54. Dividends of $3.16 per share were paid last year, return on equity is 35 percent, and its retention rate is 26 percent. a. What is the value of the stock to you, given a required rate of return of 17 percent? b. Should you purchase this stock?
(Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of $2.30 per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent. a. What is the value of the stock to you, given a required rate of return of 15 percent? b. Should you purchase this stock? a. Given a required rate of return of 15 percent, the value of the stock to you is $ (Round to the nearest cent.)
(Common stock valuation) Herrera Motor Inc. paid a $4.25 dividend last year. At a constant growth rate of 3 percent, what is the value of the common stock if the investors require a rate of return of 23 percent? The value of the Herrera Motor common stock is $ (Round to the nearest cent.)
(Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $23. Dividends of $2.42 per share were paid last year, return on equity is 15 percent, and its retention rate is 26 percent. a. What is the value of the stock to you, given a required rate of return of 14 percent? b. Should you purchase this stock?
Nynet, Inc., paid a dividend of $3.92 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 14.5 percent, what is the current value of the stock? (Round answer to 2 decimal places, e.g. 15.25.) Current value $
(Common stock valuation) Header Motor, Inc., paid a $2.99 dividend last year. At a constant growth rate of 6 percent, what is the value of the common stock if the investors require a 13 percent rate of return?
Fester Industries’ common stock is currently selling for $30.00 per share. Next year’s dividend (D1) is expected to be $1.26. If the required return on Fester’s common stock is 9.20%, what was the most recent dividend that Fester paid (D0)?
(Related to Checkpoint 10.1) (Common stock valuation) Header Motor, Inc., paid a $3.27 dividend last year. At a constant growth rate of 4 percent, what is the value of the common stock if the investors require a 9 percent rate of return? The value of the common stock is $ (Round to the nearest cent.)
(Common stock valuation) The common stock of NCP paid $1.50 in dividends last year. Dividends are expected to grow at an annual rate of 6.80 percent for an indefinite number of years. a. If NCP's current market price is $24.37 per share, what is the stock's expected rate of return? b. If your required rate of return is 8.8 percent, what is the value of the stock for you? c. Should you make the investment? a. If NCP's current market price is $24.37 per share, the stock's expected rate of return is 13.37 %. (Round to two decimal places.) b. If your required rate of return is 8.8 percent, the value of the stock would be $ (Round to the nearest cent.)
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