DataMax just paid an annual dividend of $3.75. The company has apolicy of increasing the dividend by 2.5 percent annually. You wouldlike to purchase shares of stock in this firm but realize that you will nothave the funds to do so for another four years. If you require a rate ofreturn of 14.0 percent, how much will you be willing to pay per sharewhen you can afford to make this investment?$32.03$32.83$33.12$36.89None of these answers are correct

DDM is dividend discount model and value of stock can be calculated based on present value of…

Max just paid an annual dividend of $3.75. The company has y of increasing the dividend by 2.5 percent annually. You wou to purchase shares of stock in this firm but realize that you wil the funds to do so for another four years. If you require a rate n of 14.0 percent, how much will you be willing to pay per sh you can afford to make this investment?

Max just paid an annual dividend of $3.75. The company has y of increasing the dividend by 2.5 percent annually. You wou to purchase shares of stock in this firm but realize that you wil the funds to do so for another four years. If you require a rate n of 14.0 percent, how much will you be willing to pay per sh you can afford to make this investment?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

You require an 11 percent return on your investment. Big business Corp. will pay a $3.60 per share dividend next year. The company pledges to increase its dividend by 4.5 percent per year indefinitely. How much will you pay for the company’s stock today? Suppose the company also has a preferred stock which sells for $113 per share and pays a $6.50 dividend every year in perpetuity. What is its required return?
Healthy Foods just paid its annual dividend of $1.62 a share. The firm recently announced that all future dividends will be increased by 2.1 percent annually. What is one share of this stock worth to you if you require a rate of return of 15.7 percent? Can the calculator and excel solution be provided?
The Baron Basketball Company (BBC) earned $11 a share last year and paid a dividend of $7 a share. Next year, you expect BBC to earn $12 and continue its payout ratio. Assume that you expect to sell the stock for $135 a year from now. Do not round intermediate calculations. Round your answers to the nearest cent. a. If you require 10 percent on this stock, how much would you be willing to pay for it?
Islander Inc. is a new firm in a rapidly growing industry. The company would be paying $2.50 in dividend next year. After that the company intends to grow the dividend at a 8% rate annually over a long period. You plan to buy the stock now and expect to sell it for $48.23 three years from now. What price must you pay now if your required rate of return is 10%? $42.93 O $125.00 O $35.71 O $40.62
1. You just sold a stock for $85. If the stock appreciated at 6% annually, and you owned it for eight years, what was the original price that you paid for the stock? 2. You are considering buying some order fulfillment software that is projected to save your company $27,500 per year for 3 years. If the current rate your company uses to evaluate its investments is 9%, what are you willing to pay for this investment?
Suppose that you opened a margin account (margin requirement = 60%) with your brokerage firm. Through this account, you invested in 100 shares of Mercer Inc. stocks at $80 per share a year ago. While you hold the stocks (1 year), the firm paid out $0.50 dividend per share every quarter. If you sell the stocks at $90 per share today, what is the percentage return for your investment? Assume that the commission rate is 1% of the purchase and sale price, and you need to pay 2% interest on the borrowed fund.
Torbay Corporation will pay a $3.40 per share dividend next year. The company pledges to increase its dividend by 4.5% per year indefinitely. If you require an 11% return on your investment, how much will you pay for the company,s stock today?
CEPS Group just paid an annual dividend of OMR 3.25 per share. Today, the company announced that future dividends will be increasing by 1.45 percent annually. If you require a 10 percent rate of return, how much are you willing to pay to purchase one share of this stock today?
LIFECORP, will pay a dividend of $5.10 per share next year. The company pledges to increase its dividend by 4.20 percent per year indefinitely. If you expected a return of 11.90 percent on your investment, how much should you pay for the company's stock today?
You have just purchased a share of stock for $20.29.The company is expected to pay a dividend of $0.52 per share in exactly one year. If you want to earn a 9.1% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $_______.(Round to the nearest cent.)
You have just purchased a share of stock for $21.34. The company is expected to pay a dividend of $0.54 per share in exactly one year. If you want to earn a 9.4% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $ (Round to the nearest cent.)
You have just purchased a share of stock for $21.73. The company is expected to pay a dividend of $0.62 per share in exactly one year. If you want to earn a 10.5% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $ nearest cent.) (Round to the

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