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- Consider the table given below to answer the following question. The long-run growth rate is projected at 7% and discount rate is 10%. Year Asset value Earnings Net investment Free cash flow (FF) Return on equity (ROE) Asset growth rate Earnings growth hate 2 11.00 12.43 14.05 15.87 17.46 19.20 21.13 22.60 1.43 1.43 1.62 1.62 з 1.83 1.83 5 7 8 9 10 24.19 25.88 2.06 2.27 2.40 2.54 2.60 2.18 2.33 1.59 1.75 1.92 1.48 1.58 1.69 1.81 0.48 0.52 0.48 1.06 1.02 0.48 0.52 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.125 0.12 0.115 0.09 0.09 0.10 0.10 0.13 0.10 0.07 0.07 0.07 0.07 0.10 0.06 0.06 0.03 --0.16 0.07 Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6, 12% in year 7, 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value millionUsing the discounted devident model answer this question Safaricom's dividend in year 6 is estimated to be 4.5. The return on equity is 10% with a constant dividend growth rate of 5%. Calculate the current market price.Suppose that X company expected to pay$1.05 dividends for the coming year and currently the company paid a dividend of $1, What is the value of the stock? If the required return is 10%. And the growth rate is expected to continue.
- Design a spreadsheet similar to the one below to compute the value of a variable growth rate firm over a five-year horizon. a. What is the value of the stock if the current dividend is $1.4, the first-stage growth is 14%, the second-stage growth is 7%, and the discount rate is 15%? b. What is the value of the stock if the current dividend is $1.4, the first-stage growth is 1%, the second-stage growth is 13%, and the discount rate is 14.0%? c. What is the value of the stock if the current dividend is $2.8, the first-stage growth is 14%, the second-stage growth is 7%, and the discount rate is 13%? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the value of the stock if the current dividend is $1.4, the first-stage growth is 1.4%, the second-stage growth is [a (7)%, and the discount rate is 14%? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year 4 Year 5 Projected dividend Terminal price…Valuing Common Stock Using the Discounted Constant Dividend Growth Rate Model Problem Illustration: Consider the valuation of a share of common stock that paid a $2 dividend at the end of last year and is expected to pay a cash dividend every year from now to infinity. Each year, the dividends are expected to grow at a rate of 10%. Based on an assessment of the riskiness of the common stock, the investor's required rate of return is 15%. What is the value of this common stock Do(1 + g) Dividend in year 1 g CS Stockholders' Required Rate of Return Growth Rate V csTerm Horizon value Current intrinsic value Value If investors expect a total return of 12.60%, what will be Goodwin's expected dividend and capital gains yield in two years-that is, the year before the firm begins paying dividends? Again, remember to carry out the dividend values to four decimal places. (Hint: You are at year 2, and the first dividend is expected to be paid at the end of the year. Find DY, and CGY,.) $26.55 $19.03 Expected dividend yield (DY) Expected capital gains yield (CGY,) Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: No Goodwin's investment opportunities are poor. Yes 9.20% 4.29% Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
- A firm pays a 5.80 dividend at the end of year one (d1), has a stock price of 103, and a constant growth rate (g) of 4 percent. Compute the required rate of return (ke).Calculation of gL and EPS Spencer Suppliess stock is currently selling for 60 a share. The firm is expected to earn 5.40 per share this year and to pay a year-end dividend of 3.60. a. If investors require a 9% return, what rate of growth must be expected for Spencer? b. If Spencer reinvests earnings in projects with average returns equal to the stocks expected rate of return, then what will be next years EPS? [Hint: gL = ROE Retention ratio.)Company X is expected to pay dividend of $6/share next year and maintains a constant dividend growth rate of 5 percent forever. Current stock price: $50. What is the require rate of return using dividend growth model?
- The 5-year average P/E ratio for a firm is 20.00. This year 's earning per share is $5.00 and it is expected to at a constant growth rate of 6%. What is the projected stock price for the next year? А. S4 В. $104 C. S80.25 D. $94.33 E. $106Give typing answer with explanation and conclusion company's next annual dividend will be $12 and that dividends after one year will have a constant growth rate of 5%. If the required rate of return is 9%, then what should the stock price and dividend yield be?Finance what is cost of equity as an effective annual rate given that they pay semi annually, current dividend is $1.05 and expected to grow at 1.8% forever and the current share price is 28.70
