HomeworkLib
Question

next 3 years. After that time, it plans to pay $1.25 a share for 2 years than then pay a constant dividend of $1.60 per share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 10.24 percent? Dexter Metals, paid its first annual dividend yesterday in the amount of $0.18 a share. The company plans to double each annual dividend payment for the a. $12.32 Θ b. $12.77 $13.20 od $14.26 $14.79

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solution Annual dividend in yesterday-S0.18 Company planto double each annual dividend for next 3 year First dividend-$0.18*2 $0.36 Second dividend 0.36*2 $0.72 Third dividend-0.72*2 $1.44 Forth dividend-$1.25 1.60 Last year price ofstock= P $15.625 10.2490 Calculation ofstock price priceof last year+D $0.36 (1H0.1024) (1+0.1024)2 (1+0.1024)3 (1+0.1024)4 (1+0.1024) $0.72 $1.44 $1.25 $1.25+$15.625 P $13.20 Stock price is S13.20

1 0
Add a comment
Know the answer?
Add Answer to:
next 3 years. After that time, it plans to pay $1.25 a share for 2 years...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A company plans to pay an annual dividend of $1.30 a share for two years commencing...

    A company plans to pay an annual dividend of $1.30 a share for two years commencing two years from today. After that time, a constant $2 a share annual dividend is planned indefinitely. Given a required return of 12 percent, what is the current value of this stock? Please explain how you received the answer show your work. A. $14.32 B. $9.65 C. $8.15 D. $5.58 E. $5.25 Which one of the following statements is correct? Assume cash flows are...

  • 29. Future Motors is expected to pay a $3.30 a share annual dividend next year. Dividends...

    29. Future Motors is expected to pay a $3.30 a share annual dividend next year. Dividends are expected to increase by 2.75 percent annually. What is one share of this stock worth to you today if your required rate of return is 15 percent? A. $24.56 B. $25.06 C. $26.60 D. $26.9430. 30. You cannot attend the shareholder's meeting for AlphaUnited so you authorize another shareholder to vote on your behalf. What is the granting of this authority called? A....

  • A stock is expected to pay a dividend of $1.00 each year for the next 3 years, after that the dividend is expec...

    A stock is expected to pay a dividend of $1.00 each year for the next 3 years, after that the dividend is expected to grow at a constant rate of 7% per year forever. The stock s required rate of return is 11%. What is intrinsic value of the stock today Assume that the risk-free rate is 2% and the required return of the market is 8%. What is the required return of a stock with a beta of 1.25?...

  • 21) A 13-year, 6 percent coupon bond pay year, 6 percent coupon bond pays interest semiannually....

    21) A 13-year, 6 percent coupon bond pay year, 6 percent coupon bond pays interest semiannually. The bond has a face value 21) of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent? A)-1.79 percent B) 1.79 percent C)-1.38 percent D) -1.64 percent 22) 22) This morning, you borrowed $162,000 to buy a house. The mortgage rate is 4.35 percent....

  • A share of stock is expected to pay a dividend of $1.25 in Year 1. $2.00 in Year 2. $3.25 in Year 3. $5.00 in Year...

    A share of stock is expected to pay a dividend of $1.25 in Year 1. $2.00 in Year 2. $3.25 in Year 3. $5.00 in Year 4, and then to grow at an annual rate of 5.0 percent per year. Investors require a 12.0 percent return for this stock. Given this information, determine what the price of this stock should be at Year 21. $199.00 $171.90 $208.95 $189.52 $180.50

  • LO 2 3. Bond P 3. Bond Prices. Lycan, Inc., has 7 percent coupon bonds on the market that have 9 years left to m...

    LO 2 3. Bond P 3. Bond Prices. Lycan, Inc., has 7 percent coupon bonds on the market that have 9 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 8.4 percent, what is the current bond price? end of $3.65 per vidend by 5.1 percent LO 1 dividend yielu. W t 10 Stock Values. Take Time Corporation will pay a dividend of $3 share next...

  • 21) A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value...

    21) A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value 21) of $1,000. What is the peréentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent? A)-1.79 percent C)-1.38 percent B) 1.79 percent D)-1.64 percent 22) This morning,. you borrowed $162,000 to buy a house. The mortgage rate is 4.35 percent. The loan is to be repaid in equal...

  • #1 Van Buren, Inc., currently pays $2.24 per share in dividends on its common stock. Dividends...

    #1 Van Buren, Inc., currently pays $2.24 per share in dividends on its common stock. Dividends are expected to grow at 7.00 % per year forever. If you require a 13.00 % rate of return (i.e., the discount rate) on this investment, what value would you place on a share of Van Buren common stock? Assume that the current dividend was just paid. Answer format: Currency: Round to 2 decimal places # 2 Bad Investment Incorporated has "promised" investors to...

  • TIME VALUE OF MONEY Jeff Warren after consulting with some PhD students and his Financial Advisor...

    TIME VALUE OF MONEY Jeff Warren after consulting with some PhD students and his Financial Advisor decided to register his server building company as S corporation, which is a special designation that allows small businesses to be taxed as if they were a sole proprietorship or a partnership rather than as a corporation whilst at the same time enjoying limited liability of a corporation. Jeff is satisfied with this choice because he is aware that one of the disadvantages of...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT