Question

Stock - Top Hat Questions 1. ABC Company is set to pay a $2.50 preferred dividend in perpetuity and the required rate of return is 10%. What would be the expected value of the stock using this method? (Round Up, No Decimal) a. $25 2. ABC Company is set to pay a $1.45 dividend during the next period and the required rate of return is 5%. If we assume a 3% growth rate on each dividend, what would be the expected value of the stock using this method? (Round Up, One Decimal) a. $72.5 3. ABC Company just paid a $1.45 dividend and the required rate of return is 5%. If we assume a 3% growth rate on each dividend, what would be the expected value of the stock using this method? (Round Up, Two Decimals) a. $74.68 4. You have a stock which pays a $1.45 dividend which is expected to grow at 15% for the next five years, then at a constant 6% into the future, the discount rate is 11%. (Round Up. TWO Decimals) a. $44.77 5. You have a stock which pays a $2.15 dividend which is expected to grow at 13% for the next five years, then at a constant 5% into the future, the discount rate is 8%. (Round Up, One Decimal) a. $106.7 6. A firm expects to pay dividends at the end of each of the next five years of $3.00, $2.00, $1.00 $5.00, and $7.00. Growth rate is then expected to be at 5 % constantly. If you require a 12 percent rate of return, what is the value of this firm's stock? (Round Up, Two Decimals) a. $71.71 7. A firm expects to pay dividends at the end of each of the next six years of $2.00, $1.50, $2.50, $3.00, $3.00 $3.50. Growth rate is then expected to be at 2% constantly. If you require a 6 percent rate of return, what is the value of this firm's stock? (Round Up, Two Decimals) a. $75.32 8. The stocks price of Walmart Stores Inc. (WMT) as of November 14, 2017 closed at $91.09. The company's profit for the fiscal year ending January 31, 2017, was US$13.64 billion, and its number of shares outstanding was 3.1 billion. What was the P/E ratio for Walmart? a. 20.7

Final Exam questions and I'm not sure how to solve them. Please have step by step!

Answer 1

1.
=Preferred Dividend/Required rate of return
=2.50/10%
=25.00

2.
=Expected Dividend/(required rate of return-growth rate)
=1.45/(5%-3%)
=72.5

3.
=Last Dividend*(1+growth rate)/(required return-growth rate)
=1.45*1.03/(5%-3%)
=74.68

4.
=1.45*(1.15/1.11)+1.45*(1.15/1.11)^2+1.45*(1.15/1.11)^3+1.45*(1.15/1.11)^4+1.45*(1.15/1.11)^5+1.45*(1.15/1.11)^5*1.06/(11%-6%)
=44.76504899

P.S.: I am not allowed to answer more than 4 questions