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Author Question: Prock Petroleums stock has a required return of 14%, and the stock sells for $68 per share. The firm ... (Read 73 times)

campbellfam07

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on: Aug 7, 2023

Question 1

Pink Canada Inc. (PCI) pays an annual dividend of $3.40 per share. If PCI’s stock is currently trading at $59 per share, and PCI’s expected growth rate is 9.8%, what is PCI’s expected return?

◦

15.03%


◦

15.60%


◦

15.80%


◦

16.21%



Question 2

Prock Petroleum’s stock has a required return of 14%, and the stock sells for $68 per share. The firm just paid a dividend of $1.50, and the dividend is expected to grow by 40% per year for the next 4 years, so D4= $1.50(1.40)4= $5.7624. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock’s expected constant growth rate after t = 4; that is, what is X?

◦

7.39%


◦

7.64%


◦

7.85%


◦

8.10%

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by campbellfam07 on Aug 7, 2023

lola.jashay

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Reply #1 on: Aug 7, 2023
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campbellfam07

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review

abro1885

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

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