Question
please help with these 3 questions, unsure on how to solve them QUESTION 1 Holt Enterprises recently paid a dividend, D 0 , of $2.50.
please help with these 3 questions, unsure on how to solve them
QUESTION 1
Holt Enterprises recently paid a dividend, D0, of $2.50. It expects to have nonconstant growth of 17% for 2 years followed by a constant rate of 7% thereafter. The firm's required return is 17%.
- How far away is the horizon date?
- The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2.
- The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.
- The terminal, or horizon, date is infinity since common stocks do not have a maturity date.
- The terminal, or horizon, date is Year 0 since the value of a common stock is the present value of all future expected dividends at time zero.
- The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero.
- What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent.
$
- What is the firm's intrinsic value today, ? Do not round intermediate calculations. Round your answer to the nearest cent.
$
QUESTION 2:
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $61, (b) $75, (c) $104, and (d) $149? Round your answers to two decimal places.
- ____%
- ____%
- ____%
- ____%
QUESTION 3:
Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 15%, and it has zero nonoperating assets. If Scampini has 40 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent.
Each share of common stock is worth $ ______ , according to the corporate valuation model.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started