Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:You've collected the following information from your favorite financial website.
52-Week Price
Div
PE
Close
Net
Hi
Lo
Stock (Div)
Yld %
Ratio
Price
Chg
77.40
10.43
Palm Coal 0.36
2.6
6
13.90
-0.24
Lake Lead Grp
55.81
33.42
3.8
10
40.43
-0.01
1.54
131.04
70.05
SIR 2.55
2.9
10
89.08
3.07
50.24
13.95
DR Dime 0.80
5.2
6
15.43
-0.26
Candy Galore
35.00
20.74
1.5
28
??
0.18
0.32
According to your research, the growth rate in dividends for SIR for the next five years is
expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next
five years and then the dividend growth rate falls to 5.75 percent indefinitely. Assume
investors require a return of 14 percent on SIR stock. (Hint: the number after the
company's name above is DO.)
Requirement 1:
According to the dividend growth model, what should the stock price be today? (Do not
round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Current stock price
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