Question: A ) Micro, Inc. will pay a dividend of $ 2 . 5 0 per share next year. If the company plants to increase its

A) Micro, Inc. will pay a dividend of $ 2.50 per share next year. If the company plants to increase its dividend by 7 percent per year indefinitely, and an investor requires a 5 percent return on her investment, what should the investor pay for the companys stock.
B- Discuss a stock Valuation method and its limitations.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

1. Michelin is considering going lights out in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $600,000 per year are used to manually weigh real rubber,...

Q:

Company ABC has just paid a dividend of $2.25 per share. Next year, the company will increase the dividend by 20%, after which the dividend growth rate will decrease by 5 percentage points per year...

Q:

Tech UK Ltd is planning to invest in Jumbo PLC . The assistant accountant provides the following information regarding Jumbo PLC ' s investment.The current net income of Jumbo PLC is 2 3 million ....

Q:

I NEED THIS MAX IN 10 MINS Today, a company paid a dividend in the amount of $2.15 per share. Next year, the company is expected to increase its dividend by 15%. The company is then expected to...

Q:

Hudson Corporation will pay a dividendof $2.82 per share next year. The company pledges to increase its dividend by 3 percent per year indefinitely. If you require a return of 10 percent on your...

Q:

Stocks 1. Blue Water Tours just paid an annual dividend of $0.72 a share. The firm has a policy of increasing the dividend by 3.5 percent annually. What is the current value of this stock at a...

Q:

Mon comportion will y a dividend of $5.RO per share next year. The company pled to increase is dividend by 4/0 percent per year indefinitely If you require a return of 9.50 percent on your investment...

Q:

ABC Corp. just paid a $3.25 dividend to its common shareholders. You plan to purchase the stock today because you feel that the growth rate will be 8 percent for the next two years, and then fall to...

Q:

explain why times (1/1.0375) is not needed, cuz 3.04 is the D_1, not D_o Stock Values Five Star Corporation will pay a dividghd of $3.04 per share next year. The company pledges to increase its...

Q:

Catch Up, Inc., is planning on paying an annual dividend of $1.80 per share next year. The company has a policy of increasing the dividend by 3 percent annually. As far as they know, Catch Up will...

Q:

1) __________________ Project X Initial Outlay $8,910 Year 1 $3,520 Year 2 $3,190 Year 3 $3,960 Year 4 $5,000 The answer should be calculated to two decimal places. 2) The prices for the White Swan...

Q:

A firm faces uncertain revenues and uncertain costs. Its revenues may be $120,000, $160,000, or $175,000, with probabilities .2, .3, and .5, respectively. Its costs are $150,000 or $170,000 with...

Q:

(a) For the hydrogen-atom ground state, find the probability of finding the electron farther than 2a from the nucleus. (b) For the H-atom ground state, find the probability of finding the electron in...

Q:

Let C be the curve y = 9 x 3 for 0 x 2 . 9 . Find the surface area of revolution of C about the x - axis. Surface area =

Q:

A worker is raising a 9.2-m-long ladder of mass 53 kg as shown. Knowing g a = 1.8 m and that the force exerted by the worker is perpendicular to the ladder, determine, (a) The force exerted by the...

Q:

An athlete is doing push-ups on an inclined board. Neglecting friction between his shoes and the board, determine the value of θ if he wants to limit the magnitude of the total force...

Q:

Suppose that the number of asbestos particles in a sample of 1 squared centimeter of dust is a Poisson random variable with a mean of 1000. What is the probability that 10 squared centimeters of dust...

Q:

A gas mixture at 300 K and 200 kPa consists of 1 kg of CO2 and 3 kg of CH4. Determine the partial pressure of each gas and the apparent molar mass of the gas mixture.

Q:

An alert hiker sees a boulder fall from the top of a distant cliff and notes that it takes 1.30 s for the boulder to fall the last third of the way to the ground. You may ignore air resistance. (a)...

Q:

1 3 6 .

Q:

3. It is not a good idea to put a label on someone and then assume the label tells us everything about the person. As Eric attempts to build rapport with Ms Perez, what other personal characteristics...

Q:

Define self-esteem and discuss its impact on your life.

Q:

Discuss how selfesteem is developed.