Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Use the Dividend Discount Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $3.07 per share in one year. ELO shares are currently trading for $27.81 on the NYSE, and the expected annual rate of return for ELO shares is 16.58%. Answer as a % to 2 decimal places (e.g., 12.34% as 12.34). Answer:arrow_forwardA stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $59. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $44. What are the dividend yield and percentage capital gain in this case?arrow_forwardKrell Industries has a share price of $21.81 today. If Krell is expected to pay a dividend of $1.18 this year and its stock price is expected to grow to $24.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is%. (Round to one decimal place.)arrow_forward
- Assume Gillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 2.1% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 7.5%? The value of Gillette's stock is $ (Round to the nearest cent.)arrow_forwardSuppose you know that a company's stock currently sells for $45.85 per share and the required return on the stock is 6.48 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? Answer to two decimals.arrow_forwardUse the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $8.9 per share in one year. ELO shares are currently trading for $144.48 on the NYSE, and the expected annual rate of return for ELO shares is 12.86%. Answer as a % to 2 decimal places (e.g., 12.34% as 12.34).arrow_forward
- What is the estimated current price of a share of ABC Company stock based on the Constant Dividend Growth Model? The annual required rate of return is 15.2%. ABC just paid their annual dividend of $4.44 a share and the expected growth rate of the dividend is 4.3% per year. Answer to the nearest penny.arrow_forwardNorth Side Corp’s dividends for year 1, year 2, year 3, and expected share price for year 3 are: D1=$1.95, D2=$2.10, D3=$2.18, and P3=$95 respectively. What is the company’s current share price given the required return of 8 percent?arrow_forwardAssume Gillette Corporation will pay an annual dividend of $0.63 one year from now. Analysts expect this dividend to grow at 12.6% per year thereafter until the 6th year. Thereafter, growth will level off at 1.6% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 7.7%? The value of Gillette's stock is $ (Round to the nearest cent.)arrow_forward
- Rahuarrow_forwardJiffy Co. expects to pay a dividend of $3.00 per share in one year. The current price of Jiffy common stock is $60 per share. What is the cost of internal common equity (retained earnings) if the long-term growth in dividends is projected to be 9 percent indefinitely? a. 15 percent b. 14 percent c. 16 percent d. 13 percentarrow_forwardAssume Gillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.5% per year thereafter until the 6th year. Thereafter, growth will level off at 2.3% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.4%? The value of Gillette's stock is $ (Round to the nearest cent.)arrow_forward
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