This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Plimpton Inc. just paid a dividend of 1.33. Its stock has a dividend growth rate of 7.6 and a ... (Read 117 times)

stock

  • Hero Member
  • *****
  • Posts: 573
on: Jul 10, 2018
Plimpton Inc. just paid a dividend of 1.33. Its stock has a dividend growth rate of 7.6 and a required return of 12.21. What is the current stock price if we anticipate dividends stopping in 10 years?
 
  A) 31.04
  B) 21.03
  C) 11.92
  D) 10.64

Question 2

Korver Inc. just paid a dividend of 0.73. Its stock has a dividend growth rate of 5.62 and a required return of 10.21. What is the current stock price if we anticipate dividends stopping in 20 years?
 
  A) 8.62
  B) 9.62
  C) 10.62
  D) 11.62


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

chjcharjto14

  • Sr. Member
  • ****
  • Posts: 342
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D
Explanation: D) The price is given by multiplying two components (see Equation 7.8 in the text).
The first component is = = = 31.043.
The second component is 1 - = 1 - = 1 - 0.95891610 = 0.342634.
Thus, price = 31.043  0.342634 = 10.6364, or about 10.64.

Answer to Question 2

Answer: B
Explanation: B) The price is given by multiplying two components (see Equation 7.8 in the text).
The first component is = = = 16.798.
The second component is 1 - = 1 - = 1 - 0.95835220 = 0.572926.
Thus, price = 16.798  0.572926 = 9.624 or about 9.62.


stock

  • Member
  • Posts: 573
Reply 2 on: Jul 10, 2018
YES! Correct, THANKS for helping me on my review

tanna.moeller

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Only one in 10 cancer deaths is caused by the primary tumor. The vast majority of cancer mortality is caused by cells breaking away from the main tumor and metastasizing to other parts of the body, such as the brain, bones, or liver.

Did you know?

Russia has the highest death rate from cardiovascular disease followed by the Ukraine, Romania, Hungary, and Poland.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Did you know?

Vaccines cause herd immunity. If the majority of people in a community have been vaccinated against a disease, an unvaccinated person is less likely to get the disease since others are less likely to become sick from it and spread the disease.

Did you know?

You should not take more than 1,000 mg of vitamin E per day. Doses above this amount increase the risk of bleeding problems that can lead to a stroke.

How Cities Develop: Models of Urban Growth How Cities Develop: Models of Urban Growth
The rate of facilitated diffusion The rate of facilitated diffusion
Growth and quality of life Growth and quality of life
Rapid growth in the use of alternative energy seems impressive Rapid growth in the use of alternative energy seems impressive
The rate of global emissions is rising rapidly, especially in India and China The rate of global emissions is rising rapidly, especially in India and China
Growth Accounting for Europe, A.D. 500–1700 Growth Accounting for Europe, A.D. 500–1700
Video: Cardiac Cycle (Part 1 of 4)

For a complete list of videos, visit our video library