Question
Martin Office Supplies paid a $10 dividend last year. The dividend is expected to grow at a constant rate of 9 percent over the next
Martin Office Supplies paid a $10 dividend last year. The dividend is expected to grow at a constant rate of 9 percent over the next four years. The required rate of return is 17 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
can you ans the last 5 parts
- Compute the anticipated value of the dividends for the next four years.
Note: Do not round intermediate calculations. Round your final answers to 2 decimal places.
- Calculate the present value of each of the anticipated dividends at a discount rate of 17 percent.
Note: Do not round intermediate calculations. Round your final answers to 2 decimal places.
- Compute the price of the stock at the end of the fourth year (P4)(4) .
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
- Calculate the present value of the year 4 stock price at a discount rate of 17 percent.
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
- Compute the current value of the stock.
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
- Use the formula given below to show that it will provide approximately the same answer as part e.
Do not round intermediate calculations. Round your final answer to 2 decimal places.
P0 = D1Ke g0 = 1
- If current EPS were equal to $7.60 and the P/E ratio is 1.5 times higher than the industry average of 12, what would the stock price be?
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
- By what dollar amount is the stock price in part g different from the stock price in part f?
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
- With regard to the stock price in part f, indicate which direction it would move if:
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