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Author Question: A stock is expected to pay a year-end dividend of $3.00; that is, D1= $3.00. The dividend is ... (Read 31 times)

jojoperlo_

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on: Aug 7, 2023

Question 1

A stock is expected to pay a dividend of $1.30 at the end of the year. The required rate of return is rs= 16.2%, and the expected constant growth rate is g = 9.1%. What is its current price?

◦

$18.31


◦

$18.60


◦

$18.82


◦

$19.05



Question 2

A stock is expected to pay a year-end dividend of $3.00; that is, D1= $3.00. The dividend is expected to decline at a rate of 4% a year forever (g = –4%). If the company’s expected and required rate of return is 16%, which of the following statements is correct?

◦

The company’s current stock price is $25.


◦

The company’s dividend yield 5 years from now is expected to be 12%.


◦

The company’s stock price next year is expected to be $14.40.


◦

The constant growth model cannot be used because the growth rate is negative.

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

xinyiff

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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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jojoperlo_

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

phuda

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Reply 3 on: Yesterday
Wow, this really help

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