Please show your work, thanks!! A firm is expected to pay an annual dividend of $1.20 in one year. If the current price per share of the firm's equity is $28 and if investors are requiring a 10% return on an investment in the firm's stock, then what growth rate do investors expect of the firm's dividends?

Please show your work, thanks!! A firm is expected to pay an annual dividend of $1.20 in one year. If the current price per share of the firm's equity is $28 and if investors are requiring a 10% return on an investment in the firm's stock, then what growth rate do investors expect of the firm's dividends?

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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Stability Corporation’s dividend is expected to be $1.60 next year. Its current stock price is $40 per share. The company is a constant growth firm. If investors require a return of 12 percent on this stock, what do they think Stability’s growth rate will be?
A company pays a dividend of $3 today. The company expects to grow at 4% forever and the required rate of return is 10%. What is the value of the stock today? What is the value in 5 years? What is the dividend yield? What is the capital gain yield?
1. (a) StockAjust distributed a dividend of $4. It is expected that the company will increase its dividend by 18% in the coming year, 15% in the second year and 109% in the third year. After the third year, the company will maintain the dividend growth rate at 8% forever. How much would Stock A be worth today if its yearly required rate of return is 15%?. 2. (b) Suppose you are willing to pay $30 today for a share of stock which you expect to sell at the end of one year for $32. If you require an annual rate of return of 12 percent, what must be the amount of the annual dividend which you expect to receive at the end of Year 1? [Hint: think of PO = D1/ (R-
Suppose a firm’s last dividend was $1.10 (D0) and that it will grow by 10 cents per year over the next three years (years 1 to 3). After that, the firm’s dividend are expected to grow at a constant 4.00 percent per year. What should the current price of the firm’s stock (P0) be today if investors require a rate of return of 11.00 percent on the stock? (Do not round immediate calculations. Round to 2 decimals) A. $24.12 B. $16.74 C. $18.37 D. $17.04 (Please also provide instructions on how to solve using finance calculator)
You anticipate that Liebendauer Enterprises (ticker: LBE) will have earnings per share of $3 this year. Furthermore, you expect that they will pay out $2.25 of these earnings to shareholders in the form of a dividend at the end of this year. You estimate that LBE's return on new investments is 16% and their equity cost of capital is 13%. Your expected growth rate for LBE's dividends will be closest to: OA. 4% OB. 3.3% OC. 1.6% OD. 2.4%
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You are interested in investing in a company that expects to grow steadily at an annual rate of 7.9 per cent for the foreseeable future. The company paid a dividend of $9.7 last year. If your required rate of return is 9.9 per cent, what is the most you would be willing to pay for this share?
Prima Corporation's dividend per share next year is expected to be $3.02 and the firm expects dividends to grow at a rate of 5% per year for the foreseeable future. If you can earn 13% on similar-risk investments, what is the most you would be willing to pay per share? If you can earn only 10% on similar-risk investments, what is the most you would be willing to pay per share? Compare and contrast your findings, and explain the impact of changing risk on share value.
Question: Hart Enterprises recently paid a dividend of $1.25. It expects to have non constant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%. a. How far away is the terminal, or horizon, date? b. What is the firm's horizon, or terminal, value? c. What is the firm's intrinsic value today?
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