Beranek Technologies was founded 10 years ago. It has been ...

[byomi]

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?

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9.50%

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9.90%

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10.27%

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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	​
​	​	​	​	​	​	​	​	​	​

 

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$26.50

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$26.83

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$27.12

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$27.48

[hariet5]

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[byomi]

Wow, this really help

[yeungji]

Gracias!