my question is Q 15, nonconstant growth, thank you so much !
equired return 10. y yo e Dout the relationship between the required and the stock price? Voting Rights (LO3] After successfully completing your corporate finance clas you feel the next challenge ahead is to serve on the board of directors of Schent Enterprises. Unfortunately, you will be the only person voting for you. If Schen has 550,000 shares outstanding, and the stock currently sells for $39. how much it cost you to buy a seat if the company uses straight voting? Voting Rights (LO3] In the previous problem, assume that Schenkel uses cumula tive voting, and there are four seats in the current election. How much will it cost to buy a seat now? 12. Stock Valuation and PE (LO2] The Perfect Rose Co. has earnings of $2.35 per share. The benchmark PE for the company is 18. What stock price would you do sider appropriate? What if the benchmark PE were 21? 13. Stock Valuation and PS (LO2] Twitter Me, Inc., is a new company and currently has negative earnings. The company's sales are $2.7 million and there are 130,00 shares outstanding. If the benchmark price-sales ratio is 4.3, what is your estimate of an appropriate stock price? What if the price-sales ratio were 3.6? IATE 14. Stock Valuation [LO1] Bayou Okra Farms just paid a dividend of $2.65 on its =-31) stock. The growth rate in dividends is expected to be a constant 4.5 percent per year indefinitely. Investors require a return of 15 percent for the first three years, a return of 13 percent for the next three years, and a return of 11 percent thereafter. What is the current share price? 15. Nonconstant Growth (LO1] Metallica Bearings, Inc. is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $14 per share dividend 10 years from today and will increase the dividend by 3.9 percent per year thereafter. If the required return on this stock is 12.5 percent, what is the current share price? 16. Nonconstant Dividends [LO1] Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $3.50 per share and has announced that it will increase the dividend by $4.50 per share for each of the next five years, and then never pay another dividend. If you require a return of 11 percent on the company's stock, how much will you pay for a share today? 17. Nonconstant Dividends [LO1) Lohn Corporation is expected to pay the following dividends over the next four years: $13, $9, $6, and $2.75. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price? 18. Supernormal Growth [LO1] Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 4 percent thereafter. If the required return is 11 percent, and the company just paid a dividend of $2.15, what is the current share price
