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 113 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
Thanks for the timely response, appreciate it

Mochi

  • Member
  • Posts: 300
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

According to the CDC, approximately 31.7% of the U.S. population has high low-density lipoprotein (LDL) or "bad cholesterol" levels.

Did you know?

The first successful kidney transplant was performed in 1954 and occurred in Boston. A kidney from an identical twin was transplanted into his dying brother's body and was not rejected because it did not appear foreign to his body.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

The Babylonians wrote numbers in a system that used 60 as the base value rather than the number 10. They did not have a symbol for "zero."

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

The adolescent growth spurt in humans is seen as a “bump” in the height curve and a “spike” in the h The adolescent growth spurt in humans is seen as a “bump” in the height curve and a “spike” in the h
Walter Thompson saw his assets evaporate during the stock market collapse in 1929. Desperate for ... Walter Thompson saw his assets evaporate during the stock market collapse in 1929. Desperate for ...
IPCC models are based on projections of growth IPCC models are based on projections of growth
The developing and emerging nations have high rates of population growth The developing and emerging nations have high rates of population growth
The growth in demand for energy use is met by burning fossil fuels The growth in demand for energy use is met by burning fossil fuels
Social Capability and Economic Growth Social Capability and Economic Growth
Video: Biological organic compounds

For a complete list of videos, visit our video library