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Please Answer all 11) A stock you are interested in paid a dividend of $1 last month. The anticipated growth rate in dividends and earnings
Please Answer all
11) A stock you are interested in paid a dividend of $1 last month. The anticipated growth rate in dividends and earnings is 25% for the next 2 years before settling down to a constant 5% growth rate. The discount rate is 12%. Calculate the expected price of the stock. 12) What would be the maximum an investor should pay for the common stock of a firm that has no growth opportunities but pays a dividend of $1.36 per year? The next dividend will be paid in exactly 1 year. The required rate of return is 12.5%. 13) The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next four years and then decreasing the growth rate to 5% per year. The company just paid its annual dividend of $1.00 per share. What is the current value of one share if the required rate of return is 9.25% ? 14) Assume that you are using the dividend growth model to value stocks. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the market values of all stocks to do what? 15) Stand Still Co. has been earning $1 per share on 400,000 shares and paying all earnings out. The cost of capital for a company of this risk is 10%. The company has an investment opportunity that costs $1,500,000 and will earn $230,000 after taxes per year. The company must reinvest 35% of these earnings to continue the expansion. What is the value of the company without the investment and with the investment? 16) The closing price of a stock is quoted at 22.87, with a P/E of 26 and a net change of 1.42. Based on this information, what does that tell us about earnings per shareStep by Step Solution
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