Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show your work 1) Pear Inc. will pay out a dividend of $3.30 one year from today (i.e, D, 3.30). The market believes the

please show your work

image text in transcribed

1) Pear Inc. will pay out a dividend of $3.30 one year from today (i.e, D, 3.30). The market believes the dividend will grow at a constant rate of 5% each year every year. If the required rate of return of ers tock is 17%, Pear's stock price is s_ 27.50 C) 28.56 D) 29.17 E) 29.86 2) A firm expects dividends to grow at 20% for the next two years and 4% thereafter. The firm just paid a dividend of $1.50 (ie, Do-1.50) and the required rate of return is 14.5%. The stock should sell for A) 18.50 B) 18.72 C) 18.99 D) 19.17 19 3) Blockbusted Movies, which owns walk-in movie rental stores, is facing a dismal future. The company's revenues and dividends are expected to decline. Blockbusted just paid a dividend of $1.30 D: 1.30). The market believes the dividend will decrease at a constant rate of 4% every year forever. If the required rate of return is 12%, Blockbusted's stock price should be s A) 7.80 B) 7.98 C) 8.19 D) 8.28 E) 8.41 4) An analyst is using the constant growth model to estimate the rate of growth that the market has priced into a share of LinkDiving Inc.'s stock. The stock has a market price of $30.00, and just paid a dividend of $3.00 (ie, Do = 3.00). The analyst estimates the stock's required return to be 14%. Based on this information the market is expecting LinkDiving's dividends to grow at a constant rate of 96. A) 2.33 B) 2.64 C) 2.97 D) 3.31 E) 3.64 5) Pepperazzi, Inc. will not pay a dividend for three years. Four years from today, the company is expected to pay a dividend of $3.00 per share (that is, Di 3.00). This dividend is expected to grow at 4% per year forever. The required rate of return on Pepperazzi's stock is 18%. The stock should sell for $--, today (that is, at t A) 9.18 B) 10.00 C) 10.87 D) 12.22 E) 13.04

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions