Stock Values (LO1) The next dividend payment by Kilbride Inc. will be $1.89 per share. The dividends
Question:
Stock Values (LO1) Torbay Corporation will pay a $3.40 per share dividend next year. The company pledges to increase its dividend by 4.5% per year indefinitely. If you require an 11% return on your investment, how much will you pay for the company's stock today? 7. Stock Valuation (LO1) Gould Corp. pays a constant $9.75 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 10%, what is the current share price? 14. Non-Constant Growth (LO1) Foxtrap Bearings Inc. is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $12 per-share dividend in ten years and will increase the dividend by 5% per year thereafter. If the required return on this stock is 13.5%, what is the current share price? 17. Supernormal Growth (LO1) Duffs Co. is growing quickly. Dividends are expected to grow at a 24% rate for the next three years, with the growth rate falling off to a constant 6% thereafter. If the required return is 11% and the company just paid a $1.90 dividend, what is the current share price? 19. Negative Growth (LO1) Foxtrap Inc. is a mature manufacturing firm. The company just paid a $9.40 dividend, but management expects to reduce the payout by 4% per year indefinitely. If you require a 10% return on this stock, what will you pay for a share today?
Fundamentals Of Corporate Finance
ISBN: 9781259654756
10th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan, Gordon Roberts, J. Ari Pandes, Thomas Holloway