Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 12 percent annual return?
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- Boston Company has just paid dividends of $2.5 per share, which the company projects will grow at a constant rate of 5 percent forever. If Boston Company’s shareholders require 15 percent rate of return, what is the price of its common stock? Can you show the excel formula?arrow_forwardAntiques 'R' Us is a mature manufacturing firm. The company just paid a dividend of $10.80, but management expects to reduce the payout by 5.25 percent per year, indefinitely. If you require a return of 9 percent on this stock, what will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)arrow_forwardRailway Cabooses just paid its annual dividend of $3.30 per share. The company has been reducing the dividends by 12.1 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 14 percent?arrow_forward
- please help! asaparrow_forwardEight months ago, you purchased 400 shares of AAA stock for $46.40 a Share. The company pays quarterly dividends of $1.05 a share. Today, you sold all of Your shares are for $48.30 a share. What is your total percentage return on this Investment? What is your total dollar return on this investment? Briefly discuss.arrow_forwardHow much are you willing to pay for one share of Delphia stock if the company just paid a $1.43 annual dividend last year, the dividends increase by 4 percent annually, and you require a 14 percent rate of return?arrow_forward
- Industrial Industries paid an annual dividend of $1.55 per share last month. Today, the company announced that future dividends will be increasing by 3.40 percent annually. If you require a 8.7 percent rate of return, how much are you willing to pay to purchase one share of this stock today?arrow_forwardCorporations often distribute profits to their shareholders in the form of dividends, which are simply checks mailed out to shareholders. Suppose that you have the chance to buy a share in a fashion company called Rogue Designs for $35 and that the company will pay dividends of $2 per year on that share every year. What is the annual percentage rate of return? Next, suppose that you and other investors could get a 12 percent per year rate of return by owning the stocks of other very similar fashion companies. If investors care only about rates of return, what should happen to the share price of Rogue Designs? (Hint: This is an arbitrage situation.)arrow_forwardThe VSE Corporation currently pays no dividend because of depressed earnings. A recent change in management promises a brighter future. Investors expect VSE to pay a dividend of $0.5 next year (the end of year 1). This dividend is expected to increase to $1.25 the following year and to grow at a rate of 12 percent per annum for the following 2 years (years 3 and 4). Chuck Brown, a new investor, expects the price of the stock to increase 50 percent in value between now (time zero) and the end of year 3. If Brown plans to hold the stock for 2 years and requires a rate of return of 19 percent on his investment, what value would he place on the stock today? Use Table II to answer the question. Do not round intermediate calculations. Round your answer to the nearest cent. $arrow_forward
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