Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

help with these and please show work 5-A company will pay equal dividends of $12.50 for the next 30 years, and won't pay dividends anymore.

help with these and please show work image text in transcribed
5-A company will pay equal dividends of $12.50 for the next 30 years, and won't pay dividends anymore. The required rate of return on this stock is 6% per year. What's the current stock price? What would be this value if those dividends, instead of ceasing in the 30 th year, continued forever? 6-MNO Co. stocks sell for $35 per share and its dividends keep an yearly growth rate of 2.8%. If the market requires 10% on this stock, what should be the value of the dividends this company paid most recently? 7-Assume a company that has dividends growing at a constant rate forever. Approximately how many years' worth of dividends would de equivalent to 1/3 of the current stock price, according to the dividend growth model? 8-ABC just paid a dividend of $5.50 per share, that is expected to grow at a constant rate of 2% forever. Calculate the current stock price, considering three scenarios for the required rate of return: 5%,3% or 2%. 9- Consider a company that just paid a dividend of $2.85 per share, increasing this dividend by 15% for the next year and reducing its growth rate by 3 percentage points a year until reaches a growth rate of 9%. After reaching a 9% growth, this rate will be kept forever. Calculate the stock price today, considering that the expected return is 12% per year. 10- RST Co. is currently experiencing rapid growth. The dividends are expected to grow by $6.00 per year for the next. 5 years, and then level off at 5% into perpetuity. Calculate the stock price today, considering that investors require a return rate of 8% per year, and that the last dividend paid by the company is $3.00. What would be the current stock price if the required return was 10% ? And 12%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Green And Sustainable Finance

Authors: Simon Thompson

2nd Edition

1398609242, 978-1398609242

More Books

Students also viewed these Finance questions

Question

Which one of the following is a current liability?

Answered: 1 week ago

Question

2. Identify conflict triggers in yourself and others

Answered: 1 week ago