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
Question
Nofal Corporation will pay a $4.10 per share dividend next year. The company pledges to increase its dividend by 6 percent per year, indefinitely. Required: 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. Round your answer to 2 decimal places (e.g., 32.16).)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- Farley Inc. has perpetual preferred stock outstanding that sells for $50 a share and pays a dividend of $4.75 at the end of each year. What is the required rate of return? Round your answer to two decimal places.arrow_forwardes Fegley, Incorporated, has an issue of preferred stock outstanding that pays a $6.10 dividend every year, in perpetuity. If this issue currently sells for $80.65 per share, what is the required return? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Required return %arrow_forwardSmiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.60 dividend every year, in perpetuity. If this issue currently sells for $80.40 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)arrow_forward
- Jituarrow_forwardSuppose you sell short 200 shares of BP ADR currently selling at $40 per share. You give your broker $5000 to establish your margin account. You have no interest on the funds in your margin account. Assume that BP also has paid a year-end dividend of $0.5 per share, what will be your rate of return after one year if the BP price is $38. (please keep three decimal places, such as 0.031, NOT 3.1%)arrow_forwardBedeker, Inc., has an issue of preferred stock outstanding that pays a $5.75 dividend every year in perpetuity. If this issue currently sells for $97 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)arrow_forward
- Hudson Corporation will pay a dividend of $ 4.00 per share next year. The company pledges to increase its dividend by 6.90 percent per year indefinitely. If you require a return of 13.70 percent on your investment, how much will you pay for the company's stock today? Multiple Choice $18.16 $61.18 $56.47 $55.03 $58.82arrow_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 2.4 percent per year. What is one share of this stock worth today at a required return of 14.3 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)arrow_forwardHudson Corporation will pay a dividend of $2.20 per share next year. The company pledges to increase its dividend by 6.00 percent per year indefinitely. If you require a return of 10.80 percent on your investment, how much will you pay for the company's stock today? Multiple Choice O$45.83 O O $47.67 $12.35 $43.24arrow_forward
- 3. You are given the duty of valuing your company shares. Expected net income of the next year (year 1) is 2,5 million TL, expected to grow 5% annually in the next 4 years (years 2-5), then will grow by 3% per year till infinity. You will have capex of 500,000TL in year 3, and will invest 200,000 TL each year as additional NWC in years 4 and 5. Cost of capital 12% (r)and firm has 10 million of debt. Calculate free cash flows. Calculate terminal value. C. What is the value of entire company ? d. What is the value of equity? Assume no preferred stock. Round numbers to nearest integer. a. b. FCF=NI - Capex - NWC TV=FCF 6/r-g6-00arrow_forwardyou are considering the purchase of zee company stock. you anticipate that the company will pay dividends of $3.50 per share next year and $4.00 per the following year. you believe that you can sale the stock for $20.00 per share two years from now. if your required rate is 10 percent, what is the maximum price that you would pay for a share of Zee company stock? Please don't provide answer in image format thank youarrow_forwardHQZ Inc., has just paid a dividend of $3.79 per share and has announced that it will increase the dividend by $2.64 per share for each of the next four years, and then never pay another dividend. If you require a return of 8.73 percent on the company's stock, how much will you pay for a share today? Answer to two decimals.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
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