Prima Corporation's dividend per share next year is expected to be $3.02 and the firm expects dividends

Fantastic news! We've Found the answer you've been seeking!

Question:

Prima 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.

a. If you can earn 13% on similar-risk investments, what is the most you would be willing to pay per share?

b. 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.

Related Book For answer-question

Principles Of Managerial Finance

ISBN: 978-0136119463

13th Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

See More Books

Posted Date: May 08, 2024 10:43 AM

See More Questions

Elk County Telephone has paid the dividends shown below for the past 6 years: Year Div Per Share 2015 $9.27 2014 $9.00 2013 $8.74 2012 $8.49 2011 $8.24 2010 $8.00 The company's dividend per share...
Elk County Telephone has paid the dividends shown in the following table over the past 6 years. Year Dividend per share 2012 .......$2.87 2011 ....... 2.76 2010 ....... 2.60 2009 ....... 2.46 2008...
Common stock value-Constant growth Zina Telephone has paid the dividends shown in the following table over the past 6 years. Year..........................Dividend per share...
The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. What is the productivity of the plant?
A manufacturing firm produces a product that has a ceramic coating. The coating is baked on to the product, and the baking process is known to produce 15% defective items (for example, cracked or...
The electric field between two square metal plates is 130N/C. The plates are 1.0m on a side and are separated by 3.0 cm. What is the charge on each plate (assume equal and opposite)? Neglect edge...
Washington Mutual Insurance Company issued an $\$ 80,000,7 \%, 10$-vear bond payable at a price of 110 on January 1, 2009. Journalize the following transactions for Washington. Include an...
On June 30, 2015, Sharper Corporations common stock is priced at $62 per share before any stock dividend or split, and the stockholders equity section of its balance sheet appears as follows. Common...
Taylor Series stock is $562/sh today and its futures contract (due in 6 months) is $580. Dividends of $2 are expected in 1 month and 5 months. The interest rate is 4% p.a. (flat term structure with...
Anita Mir started a business running a boutique clothing store on 1 January 2019. On that date she paid 25,000, which she had inherited from her grandma, into the business bank account and took out a...
Course-Arts and cultural tourism QUESTION: IDENTIFY ONE COUNTRY KNOWN AS A TOP TRAVEL DESTINATION FOR SUSTAINABLE FOOD TOURISM AND EXPLAIN THE REASON FOR THEIR POPULARITY AND HOW THEY PROMOTE FOOD...
eBay stock is currently at $54. It is expected to rise 9% or fall 7% in each of two 3-month periods. Suppose it rises 9% during both periods. The risk-free interest rate is 0.5% per 3 month period....
When a corporation records income tax expense, what account is credited? Explain.
In accordance with which accounting standards do financial accountants prepare financial information?
Intel is exploring a joint venture with Ford to develop computer chips to use in automobiles. Although Intel has traditionally used a cost of equity based on its beta of 1.50 and a cost of capital...
After more than a decade, the Chinese yuan is finally being decoupled from the U.S. dollar. The yuan will now float against a basket of foreign currencies. China has been under increasing pressure...
Consider a closed, rigid tank with a volume of 0.8L, filled with cold water initially at 27C. The tank is filled such that there are no voids (air pockets) within. The initial pressure within the...
Using an example of static equilibrium of an element in pure two-dimensional (2D) shear stress, prove that the shear stresses are symmetric (i.e., prove that $\sigma_{i j}=\sigma_{j i}$ when \(i eq...
The stiffness matrix $[C]$ for a specially orthotropic material associated with the principal material axes $(1,2,3)$ is given in Equation 2.16. Prove that, when the material is specially...
A representative section from a composite lamina is shown in Figure 2.7 along with the transverse stress and strain distributions across the fiber and matrix materials in the section. The composite...

Prima Corporation's dividend per share next year is expected to be $3.02 and the firm expects dividends

Question:

Expert Answer:

To determine the most you would be willing to pay per share the intrinsic value we can use the divid... View the full answer

Principles Of Managerial Finance

Students also viewed these finance questions