Question
Dishwashers Delights plows back 68.50% of its earnings to take on projects that earn the firm a rate of return of 13.50%. Dishwashers stockholders require
Dishwashers Delights plows back 68.50% of its earnings to take on projects that earn the firm a rate of return of 13.50%. Dishwashers stockholders require a return of 12.00% on their common stock. Earnings per share are expected to be $5.00 next year. a. What is the expected growth rate for Dishwashers common stock? (Round your answer to 2 decimal places.) Growth rate % b. What is the expected dividend next year? (Round your answer to 2 decimal places.) Dividend $ c. What is the intrinsic value of Dishwashers stock? (Round your answer to 2 decimal places.) Intrinsic value $ d. If Dishwashers management chose to pay out all earnings as dividends, what would be the intrinsic value of its stock? (Round your answer to 2 decimal places.) Intrinsic value $ e. What is the present value of growth opportunities for Dishwasher's Delights? (Round your answer to 2 decimal places.) PVGO
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