PROBLEMS 7 and 8 (ASAP)

7 and 8

Chapter The Valuation and Character Feed Tibbits has made a detailed dy of the denim do s sa company called Denhart Fashions that makes t tlarly stress hen app wagens. Fredas de caf for de e a cuming and looked individend cod. He's to the conclusion that the firm will pay a dividend of 55.00 for the followed by a year of 56 50 Fes t e s is to enhart now, hold for the and then I He thinks the pric e about when he well. What is the most red willing to pay for share of Deather similar Growth Rates Concept Connection Example 8-2 (page 353) & Mitech Corp's stock price has bee n Based on past growth rate performance, what would be in five year The Constant Growth (Gordon) Model: Concept Connection Example 8-3 (page 355) 5. The Spinnaker Company has paid dividend per share on Recent per year from now . What is the most the board of directors voted to grow the dividend by on your stock you would be willing to pay for a share a Spinakeriyou expect a lot forever 6. The Pancake Corporation recently paid a 5 dividend and is expected to grow before they'll buyteckimilar to Investors generally require an expected return of at least investments? those of Pancake a. What is Pancakes intrinsic vale? b. Is it a bargain if it's selling at $76 share 7. Tyler Inc.'s most recent annual dividend was $3.58 a share. The firm has been growing ata consistent 4 rate for several years, but analyste generally believe better times growth will be in the neighborhood of 5%. The stock is currently selling for $75. Stocks similar to ahead and future Tyler earn returns ranging from to 10 Calculate values for a share of Tyler at test rates of 8, 9, and 10% b. Do you think Tyler is a good investment for the long run--that is for someone planning to hold onto it for 10 or more years? c. Do you think it's a good investment for the short term That is how you buy with the expectation of welling in a relatively short period, wy a year or less d. Repeat the calculations is part suming that instead of rising. Tyler's growth rate remains ator (2) declines to . Comment on the range of prices that you've calculated in pura (A) and & The Anderson Pipe Cojust paid an annual dividend of $3.75 and is expected to powt h f a ble future Harley Bevis penerally demands a return of when he invest in companies similar to Anderson What is the most Harley should be willing to pay for a share of Andenes! Is your answer reasonable? What's going on here? What should Harley do with this real 9. Cavanaugh Construction specialises in designing and building custom home. Business excellent and Canagh projects on growth rate for the reseable future. The company pada 35 dividend. Comparable stocks are returning in What is the intrinsicale of Conghock! h. Does this seem reasonable? Why or why not? really returning If Cavanaughgrowth rate is only 8.5 and comparable to e change in the Do these relatively small changes in ampionat Why or why not? 7. Tyler Inc.'s most recent annual dividend was $3.55 a share. The firm has been growing at a consistent 4% rate for several years, but analysts generally believe better times are ahead and future growth will be in the neighborhood of 5%. The stock is currently selling for $75. Stocks similar to Tyler earn returns ranging from 8% to 10%. a. Calculate values for a share of Tyler at interest rates of 8%, 9%, and 10%. b. Do you think Tyler is a good investment for the long run--that is, for someone planning to hold onto it for 10 or more years? c. Do you think it's a good investment for the short term? That is, should you buy it with the expectation of selling in a relatively short period, say a year or less? d. Repeat the calculations in part (a), assuming that instead of rising. Tyler's growth rate (1) remains at 4% or (2) declines to 3%. e. Comment on the range of prices that you've calculated in parts (a) and (d). 8. The Anderson Pipe Co.just paid an annual dividend of $3.75 and is expected to grow at 8% for the foreseeable future. Harley Bevins generally demands a return of when he invests in companies similar to Anderson a. What is the most Harley should be willing to pay for a share of Anderson? b. Is your answer reasonable? What's going on here? What should Harley do with this result? tinn specializes in designing and building custom homes. Business has been L able futua Thanam