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You've collected the following information from your favorite financial website. 52-Week Price Div PE Close Net Hi Lo Stock (Div) Yld % Ratio Price
You've collected the following information from your favorite financial website. 52-Week Price Div PE Close Net Hi Lo Stock (Div) Yld % Ratio Price Chg 77.40 10.43 Palm Coal 0.36 2.6 6 13.90 -0.24 55.81 33.42 Lake Lead Grp 3.8 10 40.43 -0.01 1.54 131.01 69.90 SIR 2.40 2.7 10 89.05 3.07 50.24 13.95 DR Dime 0.80 5.2 6 15.43 -0.26 35.00 20.74 Candy Galore 1.5 28 ?? 0.18 0.32 According to your research, the growth rate in dividends for SIR for the next five years is expected to be 19.5 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5 percent indefinitely. Assume investors require a return of 14 percent on SIR stock. (Hint: the number after the company's name above is DO.) Requirement 1: According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Current stock price Requirement 2: $ Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued? (Click to select)
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