Forral Company has never paid a dividend. But, the company plans to start paying dividends in two years-that is, at the end of Year 2. The first dividend is expected to equal $2 per share. The second dividend and every dividend thereafter are expected to grow at a 5 percent rate. If investors require a 15 percent rate of return to purchase Forral's common stock, what should be the market value of its stock today? 7-14 2 minut
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- Forral Company has never paid a dividend. But the company plans to start paying dividends in two years—that is, at the end of Year 2. The first dividend is expected to equal $2 per share. The second dividend and every dividend thereafter are expected to grow at a 5 percent rate. If investors require a 10 percent rate of return to purchase Forral's common stock, what should be the market value of its stock today? Do not round intermediate calculations. Round your answer to the nearest cent. $ _______Forral Company has never paid a dividend. But the company plans to start paying dividends in two years-that is, at the end of Year 2. The first dividend is expected to equal $1 per share. The second dividend and every dividend thereafter are expected to grow at a 6 percent rate. If Investors require a 14 percent rate of return to purchase Forral's common stock, what should be the market value of its stock today? Do not round intermediate calculations. Round your answer to the nearest cent. $______.Stag Corp. will pay dividends of $4.75, $5.25, $5.75 and $7 for the next four years. ($4.75 in year 1, $5.25 in year 2, etc.) Thereafter, the company expects dividends to grow at a constant rate of 7%. If the required rate of return is 15%, what is the current market price of the company's stock? (Do not round intermediate calculations, and round the final answer to two decimal places.) O $80.29 $69.42 O $100.63 O $93.63
- Maynard Steel plans to pay a dividend of $2.89 this year. The company has an expected earnings growth rate of 3.7% per year and an equity cost of capital of 10.9%. a. Assuming Maynard's dividend payout rate and expected growth rate remain constant, and Maynard does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $0.98 this year and use the remaining $1.91 per share to repurchase shares. If Maynard's total payout rate remainsconstant, estimate Maynard's share price. c. If Maynard maintains the same split between divdends and repurchases, and the same payout rate, as in part (b), at what rate are Maynard's dividends, earnings pershare, and share price expected to grow in the future? Note: The share price is expected to also grow at the same rate as dividends and earnings per share.The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividends (D₁) at the end of the current year will be $1.40. The growth rate (g) is 10 percent and the discount rate () is 14 percent. a. What should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.) Price of the stock b. If there is a 5 percent total underwriting spread on the stock, how much will the issuing corporation receive? (Do not round intermediate calculations and round your answer to 2 decimal places.) Net price to the corporation c. If the issuing corporation requires a net price of $33.50 (proceeds to the corporation) and there is a 5 percent underwriting spread, what should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.) Necessary public pricePoulter Corporation will pay a dividend of $4.25 per share next year. The company pledges to increase its dividend by 6.75 percent per year, indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the company's stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price
- Cuban Corporation will pay a dividend of $3.06 per share next year. The company pledges to increase its dividend by 6 percent per year indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company’s stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Stock priceORcell Co. has the following dividend policy. Next year, the company will pay a dividend of $3. In year 2 the company will pay a dividend of $2.75. After year 2, the company expects to decrease its dividend at a constant rate of 3% per year indefinitely. If the return required by share holders is 13%, what is the price of the stock today? answer must be 17.86Maynard Steel plans to pay a dividend of $3.15 this year. The company has an expected earnings growth rate of 3.5% per year and an equity cost of capital of 9.5%. Assuming that Maynard's dividend payout rate and expected growth rate remainconstant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. Suppose Maynard decides to pay a dividend of$1.09 this year and use the remaining $2.06 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price.
- Maynard Steel plans to pay a dividend of $3.00 this year. The company has an expected earnings growth rate of 4.0% per year and an equity cost of capital of 10.0%. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $1.00 this year and use the remaining $2.00 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price.Maynard Steel plans to pay a dividend of $3.18 this year. The company has an expected earnings growth rate of 4.5% per year and an equity cost of capital of 10.8%. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $1.08 this year and use the remaining $2.10 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. Maynard's share price will be $. (Round to the nearest cent.)The next dividend payment by Im, Incorporated, will be $2.75 per share. The dividends are anticipated to maintain a growth rate of 7 percent forever. Assume the stock currently sells for $49.10 per share. What is the dividend yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the expected capital gains yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.