HomeworkLib
Question

Question 4 1 pts XYZ Company stock currently sells for $38.31 per share. The company is expected to pay a dividend of $2.45 p

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

Homework Answers

Answer #1

Discount rate=(D1/Current price)+Growth rate

=(2.45/38.31)+0.0314

which is equal to

=9.54%(Approx).

0 0
Add a comment
Know the answer?
Add Answer to:
Question 4 1 pts XYZ Company stock currently sells for $38.31 per share. The company is...
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

  • Problem1: The XYZ Co. just paid a dividend of $1.95 per share on its stock. The...

    Problem1: The XYZ Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 4% per year indefinitely. Assume investorsrequire a return of 10.5 % on the XYZ Co. stock. What will the price be in 3 years? Show yourwork/calculations Problem2: The ABCorp. paid an annual dividend of $1.37 a share last month. Today, the company announced that future dividends will be increasing by 2.8 percent annually. If...

  • 1. XYZ Company’s stock is selling for $22.50 per share. It has just announced that it...

    1. XYZ Company’s stock is selling for $22.50 per share. It has just announced that it will pay a $1.35 dividend later this year. Dividends are expected to grow 4.5% per year in the future. What rate of return are investors expecting to earn with an investment in XYZ? 2. Company J expects to have free cash flow (FCF) this year of $1,000,000. FCF is expected to grow at a constant rate of 3%. If company J has an 8%...

  • SlowGrowth Corporation currently pays a dividend of $2.3 per year. Stock analysts expect the company would...

    SlowGrowth Corporation currently pays a dividend of $2.3 per year. Stock analysts expect the company would continue to pay the current dividend amount for three years and, after the three years, increase dividend by 2% per year in perpetuity. According to the stock analysts forecast of future dividends, what should be the stock price today if the discount rate is 4%?

  • common stock sells for $29.37 a share. The stock is expected to pay $2.45 per share...

    common stock sells for $29.37 a share. The stock is expected to pay $2.45 per share next year when the annual dividend is distributed. The firm established a pattern of increasing its dividends by 1.5 percent annually and expects to continue doing so. What is the market rate of return on this stock?

  • 5. Suppose you know a company's stock currently sells for $20 per share and the required...

    5. Suppose you know a company's stock currently sells for $20 per share and the required return on the stock is 0.13. You also know that the required return is evenly divided between the capital gains yield (G) and the dividend yield (D1/P0) (this means that if the required retun is 9%, the capital gains yield is 4.5% and the dividend yield is 4.5%).If it's the company's policy to always maintain a constant growth rate in its dividends, what is...

  • Company XYZ is trying to decide whether to cut its expected dividends for next year from $10 per share to $4 per s...

    Company XYZ is trying to decide whether to cut its expected dividends for next year from $10 per share to $4 per share in order to have more money to invest in new projects. If it does not cut the dividend, the firm's expected rate of growth in dividends is 3 percent per year and the price of their common stock will be $200 per share. However, if it cuts its dividend, the dividend growth rate is expected to rise...

  • XYZ stock currently sells for $50 per share. The next expected annual dividend is $2, and...

    XYZ stock currently sells for $50 per share. The next expected annual dividend is $2, and the growth rate is 6%. What is the expected rate of return on this stock? If the required rate of return on this stock were 12%, what would the stock price be, and what would the dividend yield be?

  • 1 pts Question 32 A stock currently sells for $25 per share and pays $0.24 per...

    1 pts Question 32 A stock currently sells for $25 per share and pays $0.24 per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for $30 in one year and requires a 15 percent return on equity investments? $30.24 $26.30 $26.09 $27.74 1 pts

  • An issue of common stock currently sells for $50 per share and expected to pay $4...

    An issue of common stock currently sells for $50 per share and expected to pay $4 dividend per share at the end of the year. If the expected rate of return on this stock is 14%, what is the expected dividend growth rate?

  • The XYZ Company currently (that is, as of year 0) pays a common stock dividend of...

    The XYZ Company currently (that is, as of year 0) pays a common stock dividend of $1.5 per share. Dividend are expected to grow at a rate of 11% per year for the next 4 years and then continue growing thereafter at a rate of 5% per year. What is the current value of a share of Seneca common stock to an investor who require a 14% rate of return? Hint: The dividend growth rate g(t) changes during the history....

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