Question
Please watch the decimal places that are required for each answer. 1.) The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.30 per share on
Please watch the decimal places that are required for each answer.
1.) The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.30 per share on its stock. The dividends are expected to grow at a constant rate of 8 percent per year indefinitely. If investors require a 15 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price? Answer with 2 decimals (e.g. 10.12).
2.) Far Side Corporation is expected to pay the following dividends over the next four years: $13, $7, $15, and $5. Afterward, the company pledges to maintain a constant 0.04 growth rate in dividends forever. If the required return on the stock is 0.09, what is the current share price? Answer with 2 decimals (e.g. 45.45).
3.) E-Eyes.com Bank just issued some new preferred stock. The issue will pay a $2 annual dividend in perpetuity, beginning 20 years from now. If the market requires a 0.08 return on this investment, how much does a share of preferred stock cost today? Enter the answer with 2 decimals (e.g. 45.45).
4.) Suppose you know a company's stock currently sells for $46 per share and the required return on the stock is 0.13. You also know that the required return is evenly divided between the capital gains yield (G) and the dividend yield (D1/P0) (this means that if the required retun is 9%, the capital gains yield is 4.5% and the dividend yield is 4.5%).If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? Answer with 2 decimals (e.g. 1.23)
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