Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly-at a rate of 45% per year-during Years 4 and 5; but after Year 5, growth should be a constant 5% per year. If the required return on Computech is 16%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations. $arrow_forwardComputech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 47% per year - during Years 4 and 5; but after Year 5, growth should be a constant 6% per year. If the required return on Computech is 17%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.arrow_forwardA firm's earnings and dividends are expected to decline at a constant rate of 3% per year. The most recent dividend (Div0) was $3.8 and the required return on the stock is 14%. The current price of the stock should be $__________. Do not round any intermediate work, but round your final answer to 2 decimal places (ex: 12.34567 should be entered as 12.35).arrow_forward
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