can you answer Quantitative problems 1,2,3
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1:30. It expects to grow at a constant rate of 4% per year. If investors require a 12% return on equty, what is the current price of Hubbard's common stock? Do not round intermedlate calculations. Round your answer to the nearest cent. $ per share Zero Growth Stocks: The constant growh model is sufficiently generai to handie the case of a zero growth stock, where the dividend is expected to remain constant over time. In this situation, the equation is: P^0=TsD Note that this is the same equation developed in Chapter 5 to value a porpetuity, and it is the same equation used to value a perpetual preferred stock that entites its owners to regular, fixed dividend payments in perpetuity. The valuation equation is simply the current dividend divided by the required rate of return. Quantitative Problem 2: Carlysie Corporation has porpetual preferted stock outstanding that pays a constant annual dividend of $1,60 at the end of each yean if investors require an 10% return on the preferred stock, what is the price of the firm's perpetual preferred stock? Round your answer to the nearest cent. is per share Nonconstant Growth Stocks: For many companies, it is not appropriate to assume that dividends will grow at a constant rate. Most firms go through life cycles where they experience different growth rates during different parts of the cycle. For valuing these firms, the generalized valuatian and the constant gromth equations are combined to arrive at the nonconstant growth valuation equation: - Basically, this equation caiculates the present value of dividends received during the nonconstant gromth period and the present value of the stocks horizon value, which is the yalue at the horizon date of all dividends expected thereatter. Quantitative Problem 3: Assume today is December 31, 2019. Imagine Works Inc. just pald a dividend of s1.30 per share at the end of 2019 . The dividend is expected to grow ot. 18% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annusily. The company cost of equity ( h ) is 9.5%. Using the dividend oronth model (allowing for nonconstant growth), what sheuld be the price of the company's stock today (December 31, 2019)? Do not round intermedlate calculabont. Round your ansmer to the nearest cent. $ per whare