Assume that you are going to ignore dividends and instead rely on Buffett's look- through earnings...

  

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Assume that you are going to ignore dividends and instead rely on Buffett's look- through earnings to represent a firm's current and expected cash flow. The tax rate on dividends is 20%. Current earnings per share are $3.00 and the firm's earnings are expected to grow by 8% in perpetuity. The market capitalization rate is 12% What is the value of the stock? Write your answer to the nearest dollar without the dollar sign (XX). If the forecast dividend for one year from now is $1.50, the stock price today is $30, and the expected perpetual growth rate is 3%, what is the expected return? (See lecture slides, probably slide 10) Express to the nearest percent, so write 5.2% as 5. 1 If a share of Zoomer is selling for $44 today and is expected to sell for $50 one year from now, what is the expected return if the dividend one year from now is forecast to be $5? Express as a percent to one decimal, so write 20.123% as 20.1. Assume that you are going to ignore dividends and instead rely on Buffett's look- through earnings to represent a firm's current and expected cash flow. The tax rate on dividends is 20%. Current earnings per share are $3.00 and the firm's earnings are expected to grow by 8% in perpetuity. The market capitalization rate is 12% What is the value of the stock? Write your answer to the nearest dollar without the dollar sign (XX). If the forecast dividend for one year from now is $1.50, the stock price today is $30, and the expected perpetual growth rate is 3%, what is the expected return? (See lecture slides, probably slide 10) Express to the nearest percent, so write 5.2% as 5. 1 If a share of Zoomer is selling for $44 today and is expected to sell for $50 one year from now, what is the expected return if the dividend one year from now is forecast to be $5? Express as a percent to one decimal, so write 20.123% as 20.1.

Answer rating: 100% (QA)

To calculate the value of the stock using Buffetts lookthrough earnings approach we need to determin... View the full answer