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Author Question: Beranek Technologies was founded 10 years ago. It has been profitable for the past 5 years, but it ... (Read 60 times)

byomi

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on: Aug 7, 2023

Question 1

B.C. Inc. (BCI) pays an annual dividend of $3.10 per share. If BCI’s stock is currently trading at $58 per share, and BCI’s expected growth rate is 4.2%, what is BCI’s expected return?

◦

9.50%


◦

9.90%


◦

10.27%


◦

10.80%



Question 2

Beranek Technologies was founded 10 years ago. It has been profitable for the past 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.60 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 9% thereafter. The forecast of the future dividend stream, along with the forecasted growth rates, is shown below. With a required return of 12%, what is the current intrinsic value?

 

​

​

​

​

​

​

​

​

​

​

​

Year

0

1

2

3

4

5

         6

​

​

Growth rate

NA

NA

NA

NA

    60%    

       30%

         9%

​

​

Dividend

$0

$0

$0

$0.60

    $0.96

       $1.25

       $1.36

​

​

​

​

​

​

​

​

​

​

​

 


◦

$26.50


◦

$26.83


◦

$27.12


◦

$27.48

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by byomi on Aug 7, 2023

hariet5

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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byomi

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

smrtceo

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Reply 3 on: Yesterday
Wow, this really help

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