Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Topic Video
Question
Keidis Industries will pay a dividend of $4.15, $5.25, and $6.45 per share for each of the next three years, respectively. In four years, you believe that the company will be acquired for $59.00 per share. The return on similar stocks is 11.7 percent. What is the current stock price?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- SlowGrowth Corporation currently pays a dividend of $2.3 per year. Stock analysts expect the company would continue to pay the current dividend amount for three years and, after the three years, increase dividend by 2% per year in perpetuity. According to the stock analysts forecast of future dividends, what should be the stock price today if the discount rate is 4%?arrow_forwardNU inc. is going to pay dividends of $2/share, $3/share, and $4.1/share in the next three years, respectively. Starting in the fourth year, dividends will grow at a rate of 6.8%. If the required return is 10%, what is the current stock price? (Keep two decimal places)arrow_forwardMcKerley Corporation has preferred stock outstanding that will pay an annual dividend of $3.25 per share with the first dividend exactly 11 years from today. If the required return is 3.51 percent, what is the current price of the stock?arrow_forward
- Saks is expected to pay a dividend in year 1 of $1.92, a dividend in year 2 of $2.24, and a dividend in year 3 of $2.81. After year 3, dividends are expected to grow at the rate of 8% per year. An appropriate required return for the stock is 11%. What should the stock price be worth? (Do not round intermediate calculations. Round your answer to 4 decimal places.)arrow_forwardSlowGrowth Corporation currently pays a dividend of $2.3 per year. Stock analysts expect the company would continue to pay the current dividend amount for three years and, after the three years, increase dividend by 2% per year in perpetuity. According to the stock analysts forecast of future dividends, what should be the stock price today if the discount rate is 4%?arrow_forwardA company is going to pay $.35, $.50, and $.80 a share over the next three years. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth today at a discount rate of 13.45%?arrow_forward
- Alarrow_forwardFive Star Corporation will pay a dividend of $4.35 per share next year. The company pledges to increase its dividend by 5.5 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company's stock today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current stock pricearrow_forwardRed, Inc., Yellow Corp., and Blue Company each will pay a dividend of $4.15 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company’s stock is 8 percent, 11 percent, and 14 percent, respectively. What is the stock price for each company? What do you conclude about the relationship between the required return and the stock price?arrow_forward
- You buy a share of The Ludwig Corporation stock for $18.60. You expect it to pay dividends of $1.03, $1.0846, and $1.1421 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $21.72 at the end of 3 years. Calculate the growth rate in dividends. Round your answer to two decimal places. % Calculate the expected dividend yield. Round your answer to two decimal places. % Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return (assume market is in equilibrium with the required rate of return equal to the expected return)? Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forwardOver the next three years, Distant Groves will pay annual dividends of $1.65, $.172, and $1.80 a share, respectively. After that, dividends are projected to increase by 2.5 percent per year. What is one share of this stock worth today at a required return of 14.7 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education