Question: a) Precision Engineering recently announced that its next annual dividend will be $2.42 per share with later dividends increasing by 7.4 percent annually. What is

a) Precision Engineering recently announced that its next annual dividend will be $2.42 per share with later dividends increasing by 7.4 percent annually. What is the current value of this stock to you if you require a 10.8 percent rate of return?

b) Precision Engineering expects earnings per share of $1.56 next year. Current book value is $3.80 per share. The appropriate discount rate for Precision Engineering is 11.0 percent. Calculate the share price for Precision Engineering if earnings grow at 3.2 percent forever.

(Do not round intermediate calculations. Round your answer to 2 decimal places.)

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!

9. Upwind Tours just announced that it will pay an annual dividend of $3.60 a share one year from now. Two years from now, the company expects to pay a $28 a share liquidating dividend. After that,...

Blue Water Tours just paid an annual dividend of $9.18 a share. The firm has a policy of increasing the dividend by 5 percent annually. What is the current value of this stock at a discount rate of...

QUESTION 5 Precision Engineering recently announced that its next annual dividend will be $3.88 per share with later dividends increasing by 7 percent annually. What is the current value of this...

Precision Engineering recently announced that its next annual dividend will be $3.52 per share with later dividends increasing by 6 percent annually. What is the current value of this stock to you if...

Precision Engineering recently announced that its next annual dividend will be $1.20 per share with later dividends increasing by 2.5 percent annually. What is the current value of this stock to you...

Precision Engineering recently announced that its next annual dividend will be $2.17 per share with later dividends increasing by 5.5 percent annually. What is the current value of this stock to you...

13. Precision Engineering recently announced that its next annual dividend will be $1.20 per share with later dividends increasing by 2.5 percent annually. What is the current value of this stock to...

Precision Engineering recently announced that its next annual dividend will be $ 1 . 2 0 per share with later dividends increasing by 2 . 5 percent annually. What is the current value of this stock...

Precision Engineering recently announced that its next annual dividend will be $3.17 per share with later dividends increasing by 6.7 percent annually. What is the current value of this stock to you...

ABC Inc. does not currently pay a dividend. Analysts expect ABC to commence paying annual dividends in three years. The first dividend is expected to be $2 per share. Dividends are expected to grow...

Which of the following estate planning documnets will ,codicil, letter of last instructions, living will do the following indiviaduals families need? explain your rationlale. a. Kayla, a recent...

The value of private benefits of control may be measured using Question 3 1 options: a ) the difference in value between non - voting shares and voting shares. b ) "block premium," the difference...

On 1 March 2007 DB Limited issued R560 000 15% debentures at R98. The debentures were to be redeemed at par in four equal annual payments starting 28 February 2010. Required: Journalise the above...