d) e) f)

show excel formulas in calculations and =formulatext or explain

Global Coms Company's (GCC) latest annual dividend of 1.25 a share was paid yesterday and maintained its historic 7 per cent annual rate of growth. You plan to purchase the stock today because you believe that the dividend growth rate will increase to 8 per cent for the next three years and the seling price of the stock will be 40 per share at the end of that time. (a) How much should you be willing to pay for the GCC stock if you require a 12 per cent return? (b) What is the maximum price you should be willing to pay for the GCC stock if you believe that the 8 per cent growth rate can be maintained indefinitely and you require a 12 per cent return? (c) If the 8 per cent rate of growth is achieved, what will the price be at the end of Year 3, assuming the conditions in Part b? The Shanghai Door Company (SDC) has consistently paid out 40 per cent of its earnings in dividends. The company's return on equity is 16 per cent. What would you estimate as its dividend growth rate? Given the low risk in doors, your required rate of return on SDC is 13 per cent. What P/E ratio would you apply to the firm's earnings? What P/E ratio would you apply if you learned that SDC had decided to increase its payout to 50 per cent? (Hint: This change in payout has multiple effects.) Global Coms Company's (GCC) latest annual dividend of 1.25 a share was paid yesterday and maintained its historic 7 per cent annual rate of growth. You plan to purchase the stock today because you believe that the dividend growth rate will increase to 8 per cent for the next three years and the seling price of the stock will be 40 per share at the end of that time. (a) How much should you be willing to pay for the GCC stock if you require a 12 per cent return? (b) What is the maximum price you should be willing to pay for the GCC stock if you believe that the 8 per cent growth rate can be maintained indefinitely and you require a 12 per cent return? (c) If the 8 per cent rate of growth is achieved, what will the price be at the end of Year 3, assuming the conditions in Part b? The Shanghai Door Company (SDC) has consistently paid out 40 per cent of its earnings in dividends. The company's return on equity is 16 per cent. What would you estimate as its dividend growth rate? Given the low risk in doors, your required rate of return on SDC is 13 per cent. What P/E ratio would you apply to the firm's earnings? What P/E ratio would you apply if you learned that SDC had decided to increase its payout to 50 per cent? (Hint: This change in payout has multiple effects.)