ch 9

Problem 5.11 (Valuation of a Constant Growth Stock) Quesuon 1 0153 b Check My Work Q remaining) A stock is expected to pay a dividend of $0.75 at the end of the year{i.e., D1 = $0.75], and it should continue to grow at a constant rate of 10% a year. If its required return is 15%, what is the stock's expected price 3 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. i: Problem 9.13 (Constant Growth) Question 2 of 3 Check My Work (3 remaining) eBook H Problem Walk-Through You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50) and has a beta of 0.9. The risk-free rate is 3.6%, and the market risk premium is 6%. Justus currently sells for $25.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Do not round intermediate calculations. Round your answer to the nearest cent. $Problem 9.15 (Corporate Valuation) Question 3 of 3 Check My Work (3 remaining) eBook Problem Walk-Through Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 4% rate. Dantzler's WACC is 15%. Year FCF (S millions) - $19 $17 $60 a. What is Dantzler's horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Enter your answer in millions. For example, an answer of $13,550,000 should be entered as 13.55. Do not round intermediate calculations. Round your answer to two decimal places. million b. What is the firm's market value today? Assume that Dantzler has zero nonoperating assets. Enter your answer in millions. For example, an answer of $13,550,000 should be entered as 13.55. Do not round intermediate calculations. Round your answer to two decimal places. $ million c. Suppose Dantzler has $125.40 million of debt and 23 million shares of stock outstanding. What is your estimate of the current price per share? Write out your answer completely. For example, 0.00025 million should be entered as 250. Do not round intermediate calculations. Round your answer to the nearest cent. Check My Work (3 remaining)