PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 4, Problem 8PS
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8. Dividend discount model Company X is expected to pay an end-of-year
dividend of $5 a share. After the dividend, its stock is expected to sell at $110. If
the market capitalization rate is 8%, what is the current stock price?
6. Dividend discount model (S4.3) Company X is expected to pay an end-of-year dividend of $5 a share. After the dividend, its
stock is expected to sell at $110. If the cost of equity is 8%, what is the current stock price?
Answer the following questions using the dividend discount
model to value stock.
Part A (5 points) - The Francis Company is expected to pay a
dividend of D1 = $1.25 per share at the end of the year, and
that dividend is expected to grow at a constant rate of
6.00% per year in the future. Francis' cost of equity is
10.33%. What is the company's current stock price?
Chapter 4 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 4 - Stock markets True or false? a. The bid price is...Ch. 4 - Stock quotes a. I would like to sell 1000 shares...Ch. 4 - Stock quotes Here is a small part of the order...Ch. 4 - Stock quotes Go to finance.yahoo.com and get...Ch. 4 - Valuation by comparables Look up P/E and P/B...Ch. 4 - Dividend discount model True or false? a. All...Ch. 4 - Dividend discount model Respond briefly to the...Ch. 4 - Dividend discount model Company X is expected to...Ch. 4 - Dividend discount model Company Y does not plow...Ch. 4 - Constant-growth DCF model Company Zs earnings and...
Ch. 4 - Prob. 11PSCh. 4 - Constant-growth DCF model Pharmecology just paid...Ch. 4 - Prob. 13PSCh. 4 - Cost of equity capital Under what conditions does...Ch. 4 - Cost of equity capital Each of the following...Ch. 4 - Two-stage DCF model Company Z-prime is like Z in...Ch. 4 - Two-stage DCF model Consider the following three...Ch. 4 - Two-stage DCF model Company Qs current return on...Ch. 4 - Two-stage DCF model Compost Science Inc. (CSI) is...Ch. 4 - Growth opportunities If company Z (see Problem 10)...Ch. 4 - Growth opportunities Alpha Corps earnings and...Ch. 4 - Prob. 24PSCh. 4 - Prob. 25PSCh. 4 - Prob. 26PSCh. 4 - Horizon value Suppose the horizon date is set at a...Ch. 4 - Valuing a business Permian Partners (PP) produces...Ch. 4 - Valuing a business Construct a new version of...Ch. 4 - Valuing a business Mexican Motors market cap is...Ch. 4 - Valuing a business Phoenix Corp. faltered in the...Ch. 4 - Constant-growth DCF formula The constant-growth...Ch. 4 - DCF valuation Portfolio managers are frequently...Ch. 4 - Valuing a business Construct a new version of...
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- Expected Return of Common Stock Wooster Inc. has common stock with a market price of $120 per share. We expect the next dividend to be $9 and the constant growth rate to be 4% Calculate the following: Expected return (Total yield) Dividend yield Capital gain or loss yield b.arrow_forwarda. Using the dividend discount model, what is the current market value of a stock (i.e., PO) that has a par value of $0.10 per share, a dividend growth rate of 5%, and an expected dividend of $ .80 per share at the end of the year, assuming your required rate of return for the stock is 12.5%? Assume the market is at equilibrium.arrow_forwardh list point(s) possible K You are interested in purchasing a common company's stock. The stock is selling for $74.29 per share and paid a dividend of $1.92 last year. The dividend is expected to grow at 5 percent indefinitely. What is the stock's expected rate of return?arrow_forward
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