Question
Dishwashers Delights plows back 70.50% of its earnings to take on projects that earn the firm a 14.50% rate of return. Dishwashers stockholders require a
Dishwashers Delights plows back 70.50% of its earnings to take on projects that earn the firm a 14.50% rate of return. Dishwashers stockholders require a return of 14.00% return on their common stock. Earnings per share are expected to be $7.00 next year. Required: a. What is the expected growth rate for Dishwashers common stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the expected dividend next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is the intrinsic value of Dishwashers stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. If Dishwashers management chose to pay out all earnings as dividends, what would be the intrinsic value of its stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) e. What is the present value of growth opportunities for Dishwasher's Delights? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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