Consolidated Software doesn’t currently pay any dividends but is expected to start doing so in 4 years. That is, Consolidated will go 3 more years without paying dividends and then is expected to pay its first dividend (of $3 per share) in the fourth year. Once the company starts paying dividends, it’s expected to continue to do so. The company is expected to have a dividend payout ratio of 40% and to maintain a return on equity of 20%. Based on the DVM, and given a required rate of return of 15%, what is the maximum price you should be willing to pay for this stock today?
Answer to relevant QuestionsAssume you obtain the following information about a certain company: Total assets ...... $50,000,000 Total equity ...... $25,000,000 Net income ....... $3,750,000 EPS ........ $5.00 per share Dividend payout ...Granger Toothpaste Corp. has total equity of $400 million and 100 million shares out-standing. Its ROE is 20%. Calculate the company’s EPS. Marc Dodier is a recent university graduate and a security analyst with the Kansas City brokerage firm of Lippman, Brickbats, and Shaft. Marc has been following one of the hottest issues on Wall Street, C&I Medical Supplies, ...What is the purpose of technical analysis? Explain how and why it is used by technicians; note how it can be helpful in timing investment decisions. Describe each of the following approaches to technical analysis and note how it would be used by investors. a. Confidence index b. Arms index c. Trading action d. Odd-lot trading e. Charting f. Moving averages g. On-balance ...
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