Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A company has reported $4 per share in earnings, and maintains a 50% dividend payout ratio. Its book value per share is $25. What is
- A company has reported $4 per share in earnings, and maintains a 50% dividend payout ratio. Its book value per share is $25. What is the expected growth rate in dividends?
- 4%
- 8%
- 12%
- 16%
- Stormy-seas Corp has just paid a dividend of $3 per share out of earnings of $5 per share. What is the required rate of return on this stock if its book value is $40 and current market price is $52.50?
- 5%
- 6%
- 11%
- 12%
- Pirate Corp. has just declared a dividend (to be paid next year) of $1.00. In the following two years, a non-sustainable growth of 50% is expected, and thereafter, the growth will slow down dramatically to 5% (sustainable). If investors require 15% return, what is the value of this stock today?
- $19.02
- $29.02
- $39.02
- $49.02
- Realistic Corp.s last dividend was $1.25. Over the next 7 years, the company is expected decline in growth from 40% down to 3%. If investors require 13% return on their investment, this stocks value should be:
- $26.54
- $29.06
- $37.12
- $41.04
- 4%
- 8%
- 12%
- 16%
- 5%
- 6%
- 11%
- 12%
- $19.02
- $29.02
- $39.02
- $49.02
- $26.54
- $29.06
- $37.12
- $41.04
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started