You own a share of stock that is expected to pay a dividend of $3.17 in 3 years and a dividend of $6.67 in 7 years. After that, the annual dividends are expected to be paid that grow at an annual rate of 4.3%. If the rate of return is expected to be 6.2%, then what is the price of the share today? (Round to the nearest cent.)

You own a share of stock that is expected to pay a dividend of $3.17 in 3 years and a dividend of $6.67 in 7 years. After that, the annual dividends are expected to be paid that grow at an annual rate of 4.3%. If the rate of return is expected to be 6.2%, then what is the price of the share today? (Round to the nearest cent.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?
A stock will pay a dividend next quarter of $1.00. If the expected return is 10% per year, compounded annually, what is the price of the stock? Suppose a stock will pay $0 for the next 4 years, and then pay $1 every quarter after that. The required return is 10% per year, compounded annually. What is the price of the stock? Suppose a stock will pay $0.50, $1.00, $1.50, $2.00 and then grow at 4% per year compounded quarterly. The required return is 10% per year compounded annually. What is the price of the stock?
You have just purchased a share of stock for $20.29.The company is expected to pay a dividend of $0.52 per share in exactly one year. If you want to earn a 9.1% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $_______.(Round to the nearest cent.)
You have just purchased a share of stock for $18.85. The company is expected to pay a dividend of $0.71 per share in exactly one year. If you want to earn a 9.1% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $. (Round to the nearest cent.) C
You expect a share of EconNews.Com to sell for $69 a year from now. If you are willing to pay $70.09 for one share of the stock today, and you require a return of 7 percent, what dividend payment must you expect to receive from the stock?
You have just purchased a share of stock for $ 21.41. The company is expected to pay a dividend of $0.72 per share in exactly one year. If you want to earn a 9.4% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $________? (Round to nearest cent)
A company will pay a dividend of $3.28 per share next year. The dividends are expected to grow at 3.75 percent per year indefinitely. You require a return of 10 percent on your investment. How much will you pay for the company’s stock today? What is the stock’s dividend yield (Hint: dividend yield is a stock’s dividend divided by its price)? What will the price be in a year? What is the implied return given the change in price over the one-year period from today? Please use a HP 10bii+ Financial Calculator
You purchase a stock for $50 per share today. It will pay a dividend of $1.75 next month. If you can sell it for $65 right after the dividend is paid, what is the dividend yield? What is the capital gain? What is the rate of return?
You are considering the purchase of Ahlecs Company stock. You anticipate that the company will pay dividend of P2.25 per share next year and P2.50 per share the followiing year. You believe that you can sell the stock for P18.50 per share two years from now. If your required rate of return is 12.5%, what is the maximum price that would pay for a share?
A share is expected to pay an annual dividend of $2.53 next year, and this dividend is then expected to grow at a constant rate of 3.8% p.a. in perpetuity. If the required rate of return is 10.6% p.a., what is the value of the share?