Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- The Whirlwind Co. just paid an annual dividend of $3 a share. The firm expects to pay
dividends forever and to increase the dividend by 5 percent annually. What is the current value of this stock if the required return is 9 percent? (show work)
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- CompuCon is a new firm that just paid an annual dividend of $2.25 per share. The firm plans to increase its dividend by 23 percent per year for the next four years and then decrease the growth rate to 5 percent annually. If the required rate of return is 10.25 percent, what is one share of this stock worth today?arrow_forwardA firm just paid their annual dividend of $3.0 a share. They recently announced that all future dividends will be increased by 5% annually. What os one share of this stock worth to you if you require a 14% rate of return?arrow_forwardBoston 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_forward
- ORcell Co. has the following dividend policy. Next year, the company will pay a dividend of $3. In year 2 the company will pay a dividend of $2.75. After year 2, the company expects to decrease its dividend at a constant rate of 3% per year indefinitely. If the return required by share holders is 13%, what is the price of the stock today? answer must be 17.86arrow_forwardA firm pays out all earnings in dividends. The firm just paid a $1 dividend. The dividend is expected to grow at a rate of 10% per year for the next 3 years. Afterwards, the dividend is expected to grow at a rate of 4% per year forever. If the cost of stock is 14% what is the stock price?arrow_forwardStorico Co. just paid a dividend of $1.50 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $24.94, what required return must investors be demanding on Storico stock? (Hint: Set up the valuation formula with all the relevant cash flows, and use trial and error to find the unknown rate of return.)arrow_forward
- 2. Intel just paid an annual dividend of $2 a share. Management estimates the dividend will increase by 10 percent a year for the next two years. After that, the dividend growth rate is estimated at 5 percent. The required rate of return is 12 percent. What is the value of this stock today?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_forwardA firm just paid a $3 dividend per share. The dividend will grow at a 30% for the next 3 years and then grow forever at a constant rate of 5%. The required rate of return on the firm's stock is 10%. Find the stock price today.arrow_forward
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