Problem 10-15 Required Return (LG10-7) Paccar's current stock price is $108.26 and it is likely to pay a $3.06 dividend next year. Since analysts estimate Paccar will have an 5.6 percent growth rate, what is its required return? (Round your answer to 2 decimal places.) Required retur
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- Q24 Paccar’s current stock price is $48.20 and it is likely to pay a $0.80 dividend next year. Since analysts estimate Paccar will have an 8.8 percent growth rate, what is its required return? (Round your answer to 2 decimal places.) REQUIRED RETURN. %Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $2.50 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, PO, is $20.00. If it needs to issue new common stock, the firm will encounter a 5.3% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places.Given that the NPV per share of the reinvestment of the retained earnings next year for a firm is $2.50. Assuming the growth of the NPV is constant at 5% each year, with the required return rate of 12%, what is the estimated Present Value of Growth Opportunity (PVGO)? a. $35.71 b. $59.23 c. $46.75 d. $24.56
- If the last dividend paid by Chemical Brothers Inc. was $1.25 and analysts expect these payments to increase 4% per year, what will the stock price be next year if the required return is 15%? Select one: O a. $12.29 O b. $11.82 O c. $31.25 O d. $12.78 O e. $23.11Question: 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?Our company forecasts to pay a $10 dividend next year, which represents 100% of its earnings. This will provide investors with a 9% expected return. Instead, we decide to plowback 33% of the earnings at the firm current return on equity of 12%. What is the present value of growth opportunities (PVGO)? A. 21.8 B. 10.5 C. 35.5 D. 55.5
- Expected Return A company's current stock price is $86.30 and it is likely to pay a $5.30 dividend next year. Since analysts estimate the company will have a 12% growth rate, what is its expected return? Multiple Choice A. 5.94% B. 18.14% C. 12.00% D. 6.14%Problem 9.18 (Non constant Growth stock Valuation) Taussing Technologies Caporation (TTC) has been growing at a rate of 19% per year in recent years. This some growth rate is expected to last for another 2 to 9n = 8% years, then decline CS dander cis The Po a) If D₂ = $3.00 and rs = 9%, what is TTC's ? stock worth today! What is its expected dividend yield at this time, that is, during Year 1? What is its capital gains yields at this time, that is, during Year 1 ? to hr and c) What will TTC's dividend and capital gains yields be once its penod of supernormal growth ends? (Hint: These values will be the same regardless of whether you examine the case of 2 or 5 years of supermarmal growth; the calculations are very easy.) Dividend yield Capital gains yield UTVECCalculation of gL and EPS Spencer Suppliess stock is currently selling for 60 a share. The firm is expected to earn 5.40 per share this year and to pay a year-end dividend of 3.60. a. If investors require a 9% return, what rate of growth must be expected for Spencer? b. If Spencer reinvests earnings in projects with average returns equal to the stocks expected rate of return, then what will be next years EPS? [Hint: gL = ROE Retention ratio.)
- Start with the partial model in the file Ch07 P27 Build a Model.xlsx on the textbook’s Web site. Hamilton Landscaping’s dividend growth rate is expected to be 30% in the next year, drop to 15% from Year 1 to Year 2, and drop to a constant 5% for Year 2 and all subsequent years. Hamilton has just paid a dividend of $2.50, and its stock has a required return of 11%. What is Hamilton’s estimated stock price today? If you bought the stock at Year 0, what are your expected dividend yield and capital gains for the upcoming year? What are your expected dividend yield and capital gains for the second year (from Year 1 to Year 2)? Why aren’t these the same as for the first year?Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12% rate of return. Although the dividend has been growing at a rate of 30% per year in recent years, this growth rate is expected to last only for another 2 years (g0,1 = g1,2 = 30%). After Year 2, the growth rate will stabilize at gL = 7%. What is CCC’s stock worth today? What is the expected stock price at Year 1? What is the Year 1 expected (1) dividend yield, (2) capital gains yield, and (3) total return? What is its expected dividend yield for the second year? The expected capital gains yield? The expected total return?Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. What is the price expected to be in year 4? Answer a. $41.6 b. $50.50 c. $40 d. $10
