Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

26. The growth in dividends of XYZ.Inc. is expected to be one per year for the next two followed by a growth rate of 596

image text in transcribed
26. The growth in dividends of XYZ.Inc. is expected to be one per year for the next two followed by a growth rate of 596 per year for three years. After this five-year period, the growth in dividends is expected to be 296 per year, indefinitely. The required rate of return on XYZ. Inc. is 129. Last year's dividends per share were $2.00. What should the stock sell for today? A. 58.99 B. $25.21 C. $40.00 D. $110.00 Firm has a return on equity of 14% and a dividend-payout ratio of 60%. The firm's anticipated growth rate is A 5.6% B. 10%. C. 14% D. 20% 28. An analyst has determined that the intrinsic value of IBM stock is $80 per share using the capitalized earnings model. If the typical P/E ratio in the computer industry is 22, then it would be reasonable to assume the expected EPS of IBM in the coming year is A. $3.64. B. $4.44. C. $14.40 D. $22.50 TV

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Derivative Investments An Introduction To Structured Products

Authors: Richard D. Bateson

1st Edition

1848167113, 9781848167117

More Books

Students also viewed these Finance questions