Question

An analyst has been following American Dream stock. He projects the following dividends for the next three years YEAR Dividend $161 $2.20 $1.18 The analyst notes that American Dream stock has a required retum of 10.30%. The analyst projects that dividends will grow at a constant rate of 5.00% per year after year 3. What is the current price of the stock if his assumptions are correct? Answer format: Currency: Round to: 2 decimal places Caskey Inc. is experiencing a period of growth Dividends are expected to grow at a rate of 14.00% for the next two years and 5.00% thereafter. Yesterday the corporation paid a dividend of $1.11. If the required rate of return is 13.00% what is the intrinsic value of the stock? Answer format: Cwrency Rownd to: 2 decimal places CPJ Industries has a share price today of $22.46. IfCPJ is expected to pay a dividend of 50 52 per share this coming year, and the stock price is expected to grow to $22.75 by the end of the year What is CPJ's expected dividend yield? Awww format: Percentage Rowd to 2 decimal place (Exame: 9.24% % sign required. Will accept decimal format rotended to 4 decimal places (ex: 009243) #8 Aldean Corporation has shares of stock trading at SSL.13 today. The company has 1.00 million shares outstanding Eamings for the company last year were $6.00 million Construct a PE multiple for the company Answer format: Number: Round to 2 decimal places #9 Shack Diesel Company has stock trading today at $40.87 per share. The company just paid a $2.38 per share dividend. Kenny Smith, an analyst, believes investors should seek a 12.00% return to hold the stock. If we value Shack Diesel using the constant growth model, what dividend growth rate would justify these assumptions? Answer format: Percentage Round to 2 decimal places (Example: 9.24% % sign required. Will accepr decimal formar rounded to 4 decimal places (ex: 0.0924) #10 Crowe Industries trades at 520.47 per share. The company just paid a $1.26 per share dividend Robert Knight, an analyst, estimates that dividends will grow at 4.09% per year oing forward. If we value Crowe Industries using the constant growth model, what implied return will investors receive at the current price? # 3 4 5 6 7

Answer 1

Ans 5) stock price = dividend in year 1/(1 + roe) + dividend in year 2/(1 + roe)^2 + dividend in year 3/(1 + roe)^3 + dividend in year 3 * (1 + dividend growth rate)/((roe - dividend growth rate) * (1 + roe)^3)

= 1.61/1.103 + 2.2/(1.103)^2 + 3.18/(1.103)^3 + 3.18 * 1.05/(.053*(1.103)^3)

= 1.46 + 1.81 + 2.37 + 46.95

= $52.59