TechLink is currently experiencing rapid growth. It is expected that dividends are going to increase by...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
TechLink is currently experiencing rapid growth. It is expected that dividends are going to increase by 8% each year in the coming six years, and at a rate of 3% per year thereafter. Techlink just paid a dividend of $2 today. The required return is 12%. a. What is the price of the stock today? b. However, later today, Techlink announced that due to a delay in one of their projects, dividends are no longer going to increase by 8% each year in coming six years, and at a rate of 3% per year thereafter. Instead, they are going to now distribute $2 in the first year, $2 in the second year, $2.2 in the third year, $2.5 in the fourth year. Thereafter, dividends would grow 4% every year. Suppose the required return remains at 12%, what is the price of the stock today? TechLink is currently experiencing rapid growth. It is expected that dividends are going to increase by 8% each year in the coming six years, and at a rate of 3% per year thereafter. Techlink just paid a dividend of $2 today. The required return is 12%. a. What is the price of the stock today? b. However, later today, Techlink announced that due to a delay in one of their projects, dividends are no longer going to increase by 8% each year in coming six years, and at a rate of 3% per year thereafter. Instead, they are going to now distribute $2 in the first year, $2 in the second year, $2.2 in the third year, $2.5 in the fourth year. Thereafter, dividends would grow 4% every year. Suppose the required return remains at 12%, what is the price of the stock today?
Expert Answer:
Answer rating: 100% (QA)
a Price of the Stock Today To find the price of the stock today we can use the dividend discount mod... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Subject : Strategic Management in a Global Environment Safaricom: Innovative Telecom Solutions to Empower Kenyans As the largest mobile provider in Kenya, Safaricom has touched the lives of Kenyans...
-
1. How strong are the competitive forces confronting J. Crew in the market for specialty retail? Do a [Michael Porter] five-forces analysis to support your answer. (see chapter 3 in the textfor...
-
Describe who gets hurt in a recession, and how?
-
Some planetary scientists have suggested that the planet Mars has an electric field somewhat similar to that of the earth, producing a net electric flux of 3.63 X 10 16 N m 2 /C at the planet's...
-
1. What was Robertsons theory of the case? 2. Why is it important that the partnership was at will? 3. In addition to the wrongful dissociation claim, Robertson alleged Mauro committed other wrongs...
-
Fribourg Instrument. Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs...
-
The fermentation of corn produces a mixture of 3.3 mol% ethyl alcohol in water. If 20 mol% of this mixture is distilled at 1atm by a simple, batch distillation, calculate and plot the...
-
Alphabet Inc. invests $3 billion in a project that generates annual profits of $600 million. The project's useful life is 12 years, and there is no salvage value. Required: Calculate the average...
-
An important part of planning manufacturing capacity is having a good forecast of sales. Elizabeth Burke is interested in forecasting sales of mowers and tractors in each marketing region as well as...
-
Writing Assignment (Forensic Toxicology) In a paper of at least 3 to 5 pages, explain what is meant by the "three prongs of toxicity". Where did this term come from? Explain what each of the prongs...
-
What is the future of traditional catalog marketing? examples of companies that have discontinued their printed catalog in favor of a fully online version. Has this been successful for them?
-
2. You are required to build an Arduino system to show the status of the LED light based on the push button. It displays the status of the LED, whether it is turned on or off. A single pushbutton...
-
What is the purpose of the MSG program and industry working groups? What were the changes over time of MSG-1, 2, and 3, and what was the reasoning behind these changes? Do the program changes define...
-
Artificial intelligence is changing the way we do business. Conduct an Internet search using the keyword phrase" How does IBM Watson work? " Select a relevant article to read and or a relevant video...
-
Consider fluid flow over a surface with a velocity profile given as u(y) = 100(y + 2y^2 0.5y^3) m/s. The dynamic viscosity for air and liquid water at 20C are 1.825 105 kg/ms and 1.002 103 kg/ms,...
-
NEED AN ANSWER < ASAP PLEASE? I2C Beams Ltd., a manufacturer of lighted hockey pucks, is negotiating with the Hat Trick Company to purchase or to lease a machine that produces red-lighted pucks. The...
-
One study found that the elderly who do not have children dissave at about the same rate as the elderly who do have children. What might this finding imply about the reason the elderly do not dissave...
-
Prepaid Legal Services (PPD) is a company that sells insurance for legal expenses. Customers pay premiums in advance for coverage over some specified period. Thus, PPD obtains cash but has unearned...
-
Choosing the functional currency is a key decision for translating the financial statements of foreign entities of U.S. firms into U.S. dollars. Qing Corporation, a U.S. firm that sells car...
-
Lexington Corporation acquired all of the outstanding common stock of Chalfont, Inc., on January 1, 2016. Lexington gave shares of its no par common stock with a market value of $504 million in...
-
The production budget for cars for May (in units) is a. 6,500 b. 11,000 c. 4,500 d. 10,100
-
The total cost of goods sold for June is a. $103,500 b. $128,800 c. 57,500 d. \($232,300\) Munch Enterprises makes a small toy car that is voice activated. Projected sales for the next four months...
-
What is Munchs expected profit for April? a. $192,500 b. $56,000 c. $66,000 d. $59,000
Study smarter with the SolutionInn App