Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 3.20% per year. Term Value Dividends one year from now (D1D1) $2.2272 Horizon value (Pˆ1)P̂1 $22.10 Intrinsic value of Portman’s stock $21.41 The risk-free rate (rRFrRF) is 4.00%, the market risk premium (RPMRPM) is 4.80%, and Portman’s beta is 2.00. Assuming that the market is in equilibrium, What is the expected dividend yield for Portman’s stock today?

Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 3.20% per year. Term Value Dividends one year from now (D1D1) $2.2272 Horizon value (Pˆ1)P̂1 $22.10 Intrinsic value of Portman’s stock $21.41 The risk-free rate (rRFrRF) is 4.00%, the market risk premium (RPMRPM) is 4.80%, and Portman’s beta is 2.00. Assuming that the market is in equilibrium, What is the expected dividend yield for Portman’s stock today?

Name: Portman Industries just paid a dividend of $1.92 per share. The compan
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Description: Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to g

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 4P

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Term	Value
Dividends one year from now (D1D1)	$2.2272
Horizon value (Pˆ1)P̂1	$22.10
Intrinsic value of Portman’s stock	$21.41

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