A stock just paid an annual dividend of $5.9. The dividend is expected to grow by...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A stock just paid an annual dividend of $5.9. The dividend is expected to grow by 6% per year for the next 4 years. In 4 years, the P/E ratio is expected to be 12 and the payout ratio to be 60%. The required rate of return is 8%. Part 1 What is the intrinsic value of the stock? A stock just paid an annual dividend of $5.9. The dividend is expected to grow by 6% per year for the next 4 years. In 4 years, the P/E ratio is expected to be 12 and the payout ratio to be 60%. The required rate of return is 8%. Part 1 What is the intrinsic value of the stock?
Expert Answer:
Answer rating: 100% (QA)
Step 1 Calculate future dividends for the next 4 years We can use the dividend growth rate to estima... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
Students also viewed these finance questions
-
The accounts in the ledger of Sun Delivery Service contain the following balances on July 31, 2014. Accounts Receivable $8,000 Prepaid Insurance $ 2,000 Accounts Payable 7,900 Maintenance and Repairs...
-
Your employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Company, an employ mentagency that supplies word...
-
This case draws on material from Chapters 1820. See MyLab Finance for the data in Tables 1, 2, 3, and 4 and the spreadsheet referenced in the case questions. Idexo Corporation is a privately held...
-
On March 19, Modern Kitchens, a retail store, received Credit Memorandum 244 for $4,290 from J & M Appliance Corporation. The credit memorandum covered a return of damaged trash compactors originally...
-
What should Pub Zone have done to satisfy its duty?
-
Use Gauss elimination to solve the system of equations 2x1 X] 3x1 + - 3x2 + 2 X2 - - X3 2x3 X3 7 -2 0
-
A university pumps its water from wells located on campus. The falling water table has caused pumping costs to increase, the quantity of water available to decrease, and the quality of water to...
-
Julia Baker died, leaving to her husband Brent an insurance policy contract that provides that the beneficiary (Brent) can choose any one of the following four options. (a) $55,000 immediate cash....
-
When considering the system resource model, Owens College would be viewed as effective; it receives a steady flow of highly academically qualified students and obtains significant endowment growth...
-
Reconsider the Profit & Gambit Co. problem described in Section 2.6. Suppose that the estimated data given in Table 2.2 now have been changed as shown in the table that accompanies this problem....
-
Suppose that: A stock is currently trading at $90. - It has announced that it will pay a $1 dividend in two months. Zero-coupon bonds with one, two, and three months to maturity and $100 face...
-
Sometimes we hear about super incomes and wonder if someone is worth the money paid. For this assignment, be cautious in directing your response to a SALARY (including bonuses) and not someone's net...
-
propose a program, policy, or invention for crime prevention or control. Your proposal can target crime in general, a specific crime, or some social problem/condition that causes crime. Your proposal...
-
This assignment allows for class discussion on the topics of this module. Through your class discussions you are allowed the opportunity to share "real-world" examples with your classmates which help...
-
What term refers to the elevation of subjects of a painting by portraying them in poses and settings normally associated with positions of high status and power?
-
Present a report of the given case along with some relevant references . The plaintiff attended a bridal shower that was held at the defendant's dance hall. She paid an admission fee and sat at a...
-
Ben has recently inherited a painting by Monet. Excited about his good fortune he hires Bob Villa to remodel his home. The bill from Bob Villa is $30,000. Ben pays Bob with a promissory note for...
-
Orange juice producers are dismayed and puzzled. An economist told them that the reason the demand for orange juice fell is that a new technology allow tomato producers to pick ripe tomatoes more...
-
Giffen Forest Products has sold lumber to the British company Bulldog Builders, with payment due six months from today. The payment due is 155,000. The Canadian dollar and British pound rate is...
-
Discuss the average maturity of the federal government's marketable interest bearing public debt and the implications for the money and capital markets if the present trend continues.
-
A firm buys a new piece of equipment for $24,907 and will receive a cash flow of $4,500 per year for eight years. What is the IRR?
-
The Lorenz curve for Bangladesh looks like this: How much income do individuals in the top income quintile in Bangladesh receive? Cumulative percentage of income 58.7% 37.4 21.3 8.9 20 40 60 80 100%...
-
What would the Lorenz curve for lawyers represent?
-
The accompanying table shows income distribution data for three countries: a. Using this information, draw a Lorenz curve for each country. b. Which country has the most equal distribution of income?...
Study smarter with the SolutionInn App