Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The earnings and dividends of Ned Computer Co. are expected to grow at an annual rate of 15 percent over the next 4 years and then slow to a constant growth rate of 8 percent per year. Ned currently pays a dividend of $1 per share. What is the value of Ned stock to an investor who requires a 12 percent
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- XYZ Company announced today that it will begin paying annual dividends next year. The first dividend will be $0.1 a share. The following dividends will be $0.2, $0.3, and $0.4 a share annually for the following 3 years, respectively. After that, dividends are projected to increase by 3 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 10%?arrow_forwardSlowGrowth Corporation currently pays a dividend of $2.3 per year. Stock analysts expect the company would continue to pay the current dividend amount for three years and, after the three years, increase dividend by 2% per year in perpetuity. According to the stock analysts forecast of future dividends, what should be the stock price today if the discount rate is 4%?arrow_forwardGeneral Motors expects to pay dividends of $7 this year and $9 next year, after that the company expects to grow at a 6% rate for the rest of its life. What is the value of the stock if investors require an 11% return to purchase the stock?arrow_forward
- The earnings of Eastern Corp. are expected to grow at an annual rate of 12% over the next 5 years and then slow to a constant rate of 8% per year. The company currently pays a dividend of $0.36 per share. What is the value of the company’s stock to an investor who requires a 14% rate of return? If the stock has a market price of $15, do you buy it ?arrow_forwardSpendex Corporation paid a dividend of $ 1.13 per share today. Dividends are expected to grow at 11.00% per year for the next 3 years, then at 8.00% per year in the following 2 years. After the 5th year, the growth in dividends is expected to remain constant at 6.00%. As an investor, you require a 10.00% rate of return on this equity investment. What is the maximum price you would be willing to pay for a share of Spendex?arrow_forwardThe dividend for Should I, Inc., is currently $1.65 per share. It is expected to grow at 12 percent next year and then decline linearly to a perpetual rate of 3 percent beginning in four years. If you require a return of 15 percent on the stock, what is the most you would pay per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price per sharearrow_forward
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