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Author Question: You are considering the purchase of a common stock that paid a dividend of 2.00 yesterday. You ... (Read 76 times)

asan beg

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You are considering the purchase of a common stock that paid a dividend of 2.00 yesterday. You
  expect this stock to have a growth rate of 15 percent for the next 3 years, resulting in dividends of
  D1 = 2.30, D2 = 2.645, and D3 = 3.04.
 
  The long-run normal growth rate after year 3 is expected
  to be 10 percent (that is, a constant growth rate after year 3 of 10 per year forever). If you require
  a 14 percent rate of return, how much should you be willing to pay for this stock?
  A) 89.75 B) 56.46 C) 62.57 D) 83.65

Question 2

JPR Company is financed 75 percent by equity and 25 percent by debt. If the firm expects to earn
  30 million in net income next year and retain 40 of it, how large can the capital budget be before
  common stock must be sold?
 
  A) 16.0 million B) 15.5 million C) 12.0 million D) 7.5 million


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courtney_bruh

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asan beg

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


Dnite

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Reply 3 on: Yesterday
Great answer, keep it coming :)

 

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