Question
Quantitative Problem A: Hubbard Industries just paid a common dividend, D 0 , of $1.50. It expects to grow at a constant rate of 2%
Quantitative Problem A: Hubbard Industries just paid a common dividend, D0, of $1.50. It expects to grow at a constant rate of 2% per year. If investors require a 8% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ ________ per share
Quantitative Problem B: Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.50 at the end of each year. If investors require an 10% return on the preferred stock, what is the price of the firm's perpetual preferred stock? Round your answer to the nearest cent. $ _______ per share
Quantitative Problem C: Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of $1.10 per share at the end of 2019. The dividend is expected to grow at 12% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019)? Do not round intermediate calculations. Round your answer to the nearest cent. $ _______ per share
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