Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stock Valuation Problems ( Please wether you use excel or not to solve those problems, show your steps so that i can understand) 5.A stock

Stock Valuation Problems ( Please wether you use excel or not to solve those problems, show your steps so that i can understand)

5.A stock is trading at $75 per share. The stock is expected to have a year-end dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate g throughout time. The stocks required rate of return is 13% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g?(You can use the constant growth model to solve for g algebraically)

6.Burned Cookies common stock is expected to pay a dividend of $3 a share at the end of this year (D1 = $3.00); its beta is 0.9; the risk-free rate is 4.2%; and the market risk premium is 6%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $40 a share. Assuming the market is in equilibrium, what does the market believe will be the stocks price at the end of 3 years (i.e., what is P3)?

7.Bobs Mining Companys coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the companys earnings and dividends are declining at the constant rate of 3% per year. If D0 = $6 and rs = 13%, what is the estimated value of Bobs Mining stock?

8.Fisher Companys current stock price is $36 00, its last dividend was $2 40, and its required rate of return is 12%. If dividends are expected to grow at a constant rate, g, in the future and if rs is expected to remain at 12%, what is Fishers expected stock price 5 years from now?

9.You can value a stock based just on its expected cash flows to an investor. If a stock is expected to pay dividends of $1.25 per year for the next five years and you believe that you can sell it for $65 at the end of the five year period, what is its value if your required rate of return is 11%?

10.If you paid $50 for a share of stock and received dividends of $2 per year for 3 years and then sold the stock for $70, what was your rate of return? Hint: Use the IRR function in Excel.

Thank you for helping !

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

The Business Of Personal Finance

Authors: Joseph Calandro Jr, John Hoffmire

1st Edition

1032104562, 978-1032104560

More Books

Students also viewed these Finance questions

Question

2. How did it address these issues?

Answered: 1 week ago