Winter in Boston, Inc. just paid a dividend of $2 per share. It expects to earn $6 per share next year. The required rate of return on the stock is 12 percent and its dividends are growing at a constant rate of 8 percent per year. Calculate the present value of growth opportunities for the stock (PVGO

Winter in Boston, Inc. just paid a dividend of $2 per share. It expects to earn $6 per share next year. The required rate of return on the stock is 12 percent and its dividends are growing at a constant rate of 8 percent per year. Calculate the present value of growth opportunities for the stock (PVGO

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

T-mobile just paid an annual dividend of $2.9 per share. The dividend is expected to grow by 4% per year. The required rate of return is 12%. What is the best estimate of the stock price in 9 years?
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Jumbo Corp. is experiencing rapid growth. Dividends are expected to grow at 30 percent per year during the next three years, 18 percent over the following year, and then 8 percent per year indefinitely. The required return on this stock is 13 percent, and the stock currently sells for K65 per share. What is the projected dividend for thecoming year?
The firm just paid an annual dividend of $0.8 per share and plans to increase that amount by 25% next year. After that, the firm expects the dividend will grow by 3% annually. What is the expected value of this stock next year if the required return is 13 percent? 9.9 O 10.3 10.2
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You have discovered a company that is expected to pay $2.25 dividend at the end of this year. The dividend is expected to grow forever at a constant rate of 4% a year. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock?
Entergy stock is currently trading at $40. The company is currently paying a dividend of $4, which is expected to grow at 5% in a year and then at g% forever. If the required rate of return is 9% and the stock price next year is $45, find the value of g.
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The year-end dividend of a company will be $2.40 and this is expected to grow at 4% forever. The required rate of return for the stock is 12%. Calculate the price of the stock. If earnings per share re $3.10 what is the present value of growth opportunities for the company.
Mobray Corp. is experiencing rapid growth. Dividends are expected to grow at 25 percent per year during the next three years, 15 percent over the following year, and then 7 percent per year indefinitely. The required return on this stock is 12 percent, and the stock currently sells for $88 per share. What is the projected dividend for the coming year? (i.e. Div 1)
The firm just paid an annual dividend of $0.8 per share and plans to increase that amount by 25% next year. After that, the firm expects the dividend will grow by 2% annually. What is the expected value of this stock next year if the required return is 12 percent? 10.2 10.3 9.9

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