my question is Q 2, stock values, thank you so much !
7. Growth Rate Voting Rights 1031 wund the growth rateidend growth les to chora.omes to Ick with . Why would as Google Chapter 8 Stock Valuation rowth Rate 1 In the context of the dividend growth model, is it true that the owth rate in dividends and the growth rate in the price of the stock are identical? Voting Rights 1031 When it comes to voting in elections, what are the differences between U.S. Political democracy and U.S. corporate democracy? Corporate Ethics (LO3] Is it unfair or unethical for corporations to create classes of stock with unequal voting rights? Voting Rights LO3] Some companies, such as Google, have created classes of stock with no voting rights at all. Why would investors buy such stock? Stock Valuation (LOT Evaluate the following statement Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits. Two-Stage Dividend Growth Model ILO1] One of the assumptions of the two- stage growth model is that the dividends drop immediately from the high growth rate to the perpetual growth rate. What do you think about this assumption? What happens if this assumption is violated? Voting Rights (LO3] In the chapter, we mentioned that many companies have been under pressure to declassify their boards of directors. Why would investors want a board to be declassified? What are the advantages of a classified board? Price Ratio Valuation (LO2] What are the difficulties in using the PE ratio to value LO1] Profits arock valuate the for 11 14. stock? QUESTIONS AND PROBLEMS con 1. Stock Values [LO1] The Jackson-Timberlake Wardrobe Co. just paid a dividend BASIC of $1.95 per share on its stock. The dividends are expected to grow at a constant rate (Questions of 4 percent per year indefinitely. If investors require a return of 10.5 percent on The Jackson-Timberlake Wardrobe Co. stock, what is the current price? What will the price be in three years? In 15 years? 2. Stock Values [LO1] The next dividend payment by Halestorm, Inc., will be $2.04 per share. The dividends are anticipated to maintain a growth rate of 4.5 per- cent forever. If the stock currently sells for $37 per share, what is the required return? 3. Stock Values (LO1] For the company in the previous problem, what is the dividend yield? What is the expected capital gains yield? 4. Stock Values (LO1 Caan Corporation will pay a $3.56 per share dividend next year. The company pledges to increase its dividend by 3.75 percent per year indefi- nitely. If you require a return of 11 percent on your investment, how much will you pay for the company's stock today? 5. Stock Valuation (LO1] Tell Me Why Co. is expected to maintain a constant 3.9 per- cent growth rate in its dividends indefinitely. If the company has a dividend yield of 59 percent, what is the required return on the company's stock? that company's stock currently sells A
