You anticipate that Liebendauer Enterprises (ticker: LBE) will have earnings per share of $5 this year. Furthermore, you expect that they will pay out $2.50 of these earnings to shareholders in the form of a dividend at the end of this year. You estimate that LBE's return on new investments is 15% and their equity cost of capital is 13%. Your expected growth rate for LBE's dividends will be closest to OA. 3% OB. 6.5% OC. 7.5% OD. 4.5% D
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- Laurel Enterprises pays annual dividends, and the next dividend is expected to be in one year. Laurel expects earnings next year of $3.68 per share and has a 50% retention rate, which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected return on new investment; this is expected to continue forever. What do you estimate the firm's current stock price to be? (Hint: its next dividend is due in one year.) The current stock price will be $0.55 (Round to the nearest cont.)Laurel Enterprises pays annual dividends, and the next dividend is expected to be in one year. Laurel expects earnings next year of $3.58 per share and has a 50% retention rate, which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected return on new investment; this is expected to continue forever. What do you estimate the firm's current stock price to be? (Hint: its next dividend is due in one year.) C The current stock price will be $ (Round to the nearest cent.)Suppose the Pale Hose Corp. is expected to pay a dividend next year of OMR2.25 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 20% for the following 2 years and then at 5% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 15%, what is the value of a share of Pale Hose?
- Amiga Corporation has just paid an annual dividend of $1.45. Analysts are predicting a 10.0% per year growth rate in earnings over the next 6 years. After that, Amiga's earnings are expected to grow at the current industry average of 4.2% per year. Assume that Amiga's cost of equity capital is 8.4% per year and that its dividend payout ratio will remain constant for the foreseeable future. What price does the dividend-discount model predict Amiga shares should currently sell for? The value of Amiga Corporation's shares is $$(Round your answer to the nearest cent)You expect that Flex Industries (FI) will have earnings per share of $2 this year and that they will pay out $0.50 of these earnings to shareholders in the form of a dividend. FI's return on new investments is 15% and their equity cost of capital is 11%. The expected growth rate for Fl's dividends is closest to: 1) 6.0% 2,7.5% 3) 4.5% O 4) 3.0% 5) no correct answeryou expect kt industries (kti) will have earnings per share of $4.6 this year and expect that they will pay out $1.59 of these earnings to shareholders in the form of a dividend. kti's return on new investments is 10%, and their equity cost of capital is 16%. ... kti's dividend growth rate is % (round to two decimal places) if kti's dividend growth rate will remain constant, and kti's next year dividend is $1.69. then kti's current stock price should be $ (round to two decimal places)
- HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1, and its dividend is expected to grow at a rate of 4% per year thereafter. What is your estimate of HighGrowth’s cost of equity capital?Company A is a worldwide delivery company that is expected to generate a dividend (per share) of $1.40 one year from now (i.e. at t=1). You are expecting that on average Company A's dividends will grow at 5% each year after that into the indefinite future. Assume for simplicity that all dividends are paid at the end of each year. Suppose that the appropriate discount rate for these dividends is 10%. a. What is the current stock price for Company A? Assume that any dividend at t=0 has already been paid out. b. What do you expect the stock price of Company A to be next year (i.e. at t=1) immediately after the dividend has been paid out? c. What is the expected return for holding the stock of Company A over the year ahead? Hint: Find the IRR on the expected cash flows from buying and holding the stock for one year. The cash flows should include the purchase and sale of the stock as well as the dividend you will receivePrima Corporation's dividend per share next year is expected to be $3.02 and the firm expects dividends to grow at a rate of 5% per year for the foreseeable future. If you can earn 13% on similar-risk investments, what is the most you would be willing to pay per share? If you can earn only 10% on similar-risk investments, what is the most you would be willing to pay per share? Compare and contrast your findings, and explain the impact of changing risk on share value.
- Spendex 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?Analysts project that dividends for Industrial Amalgamated will be $2.00 per share next year and are expected to grow at 2.1% per year indefinately. If investor's have a required return of 8.5%, how much should the stock sell for?You expect KT industries (KTI) will have earnings per share of $5 this year and expect that they will pay out $1.00 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 15% and their equity cost of capital is 13%. The expected growth rate for KTI's dividends is closest to: A. 12% B. 7.2% C. 4.8% D. 10.4%
