Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer question 4. 2. Lucky Corp had net income of $4.41/share last year, and it paid $1.87/ share in dividends last year. A) What

please answer question 4.
image text in transcribed
2. Lucky Corp had net income of \$4.41/share last year, and it paid $1.87/ share in dividends last year. A) What was its Dividend Payout Ratio last year? B) What was its Retention Rate last year? (Your answers should be a % carried to one place.) 3. If Lucky Corp can earn 12% after tax on new investments, estimate how fast its net income can grow annually in the future. (Your answers should be a % carried to one place.) 4. You expect Lucky to pay a dividend of $2/ share next year (Year 1); $2.14 share in Year 2; $2.28 share in Year 3; and $2.44 share in Year 4. You also believe the stock will trade in the market at $120/ share at the end of Year 4. a. Draw a timeline for Lucky per your expectations assuming all cash flows occur at the end of each year. b. You have estimated Lucky's Cost of Equity to be 9.2%. Using your timeline, estimate what Lucky's stock should be trading at now

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_2

Step: 3

blur-text-image_3

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

Financial Markets And Institutions

Authors: Jeff Madura

5th Edition

0324027443, 9780324027440

More Books

Students also viewed these Finance questions