(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 commonstock 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.)

Determining common stock value is crucial for informed investing. One method is the constant growth…

Answered: (Common stock valuation) Herrera Motor…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

(Common Stock Valuation) Header Motor, Inc., paid a $3.50 dividend last year. At a constant growth rate of 5 percent, what is the value of the common stock if the investors require a 20-percent rate of return?
(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?
(Common stock valuation) The common stock of NCP paid $1.29 in dividends last year. Dividends are expected to grow at an annual rate of 6.60 percent for an indefinite number of years. a. If your required rate of return is 9.20 percent, what is the value of the stock for you? b. Should you make the investment?
(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.)
Southern Markets recently paid an annual dividend of $2.77 on its common stock. This dividend increases at an average rate of 4.4 percent per year. The stock is currently selling for $38.67 a share. What is the market rate of return?
(Related to Checkpoint 10.1) (Common stock valuation) Header Motor, Inc., paid a $2.81 dividend last year. At a constant growth rate of 5 percent, what is the value of the common stock if the investors require a 10 percent rate of return? .... The value of the common stock is $ (Round to the nearest cent.)
Gillette's most recent annual dividend was $8 per share. The company expects the growth of its dividends to be stable at 3% per year going forward. a) If investors require a 9% return, what is the current value of Gillette's stock? (round to nearest cent) b) If the stock currently trades at $116.57 per share, what is the dividend growth rate investors expect? (round to nearest percent) Answer in Excel.
NTT Corp is expected to pay a $2.80 annual dividend to its common shareholders next year. Analysts expect these dividends to grow indefinitely at a 6.5 percent annual rate. If the required rate of return on the common stock is 10.8 percent, what is the intrinsic value of the common stock? a. $56.28 b. $61.44 c. $65.12 d. $69.35
Gillette's most recent annual dividend was $8 per share. The company expects the growth of its dividends to be stable at 3% per year going forward. a) If investors require a 9% return, what is the current value of Gillette's stock? (round to nearest cent) b) If the stock currently trades at $116.57 per share, what is the dividend growth rate investors expect? (round to nearest percent) Hint: When the constant-growth formula is solved for the growth variable, it is g = -D/P + r
(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.)
(Common stock valuation) The common stock of NCP paid $1.32 in dividends last year. Dividends are expected to grow at an annual rate of 8.00 percent for an indefinite number of years. a. If your required rate of return is 10.50 percent, what is the value of the stock for you? b. Should you make the investment? a. If your required rate of return is 10.50 percent, the value of the stock for you is $ nearest cent.) (Round to the

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

SEE MORE TEXTBOOKS

(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.)