Question: The XYZ Company paid $1.35 dividend yesterday. Its dividend growth rate is expected to be constant at 19.70% for 2 years, after which dividends are

The XYZ Company paid $1.35 dividend yesterday. Its dividend growth rate is expected to be constant at 19.70% for 2 years, after which dividends are expected to grow at a rate of 5.20% forever. Its required return (rs) is 9.85%. What is the best estimate of the current stock price?

$38.55

$30.29

$39.34

$29.50

$40.13

Step by Step Solution

★★★★★

3.41 Rating (151 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The detailed answer for the above question is provided below Solution To estimate the c... View full answer

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!

The cantilevered bar in the figure is made from a ductile material and is statically loaded with Fy = 250 lbf and Fx = Fz = 0. Analyze the stress situation in the small diameter at the shoulder at A...

Francis Company produces scarf for ladies. the data for production and marketing are indicated below: Cost per yard of cloth P40 Allowance for rejected scarf 5% of production Yards of cloth needed...

Fergus and FelicityVine live in the North East of England. They own a house valued around 390,000 and this is owned as a beneficial joint tenancy. They have been married for 20 years and have no...

Lois Griffon, 36 years old, is a senior planner with the Calgary Board of Education at its head office, downtown, at Macleod Trail and 5 th Ave SE. Her husband, Peter, is 33 years of age and is...

Please show your work to explain The XYZ Company paid $1.75 dividend yesterday. Its dividend growth rate is expected to be constant at 24.50% for 2 years, after which dividends are expected to grow...

The XYZ Company paid $1.85 dividend yesterday. Its dividend growth rate is expected to be constant at 23.80% for 2 years, after which dividends are expected to grow at a rate of 5.25% forever. Its...

please I need help ASAP on these? can anyone assist Not allowed. This test can only be taken once. Force Completion This test can be saved and resumed at any point until time has expired. The timer...

QUESTION 1 1. ABC's last dividend was $3.1.The dividend growth rate is expected to be constant at 20% for 3 years, after which dividends are expected to grow at a rate of 5% forever.If the firm's...

I need the answers only to the following questions. QUESTION 3 1. If D1 = $3.1, g (which is constant) = 2.5%, and P0 = $70.1, what is the stock's expected total return for the coming year? Note:...

1. Stock Values A. ABC Corp. just paid a dividend of $1.95 and the dividends are expected to indefinitely grow at a constant rate of 4.1% p.a. If investors require a return of 10.2% p.a. on this...

Please see the attatched assignment 1-1. The Ackert Company's last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to...

In your groups, discuss the following questions about the CPC case. Each student must complete their own written answers (in their own words) and submit their responses as this week's marked question...

Evaluate partnership relationships within health and social care services.

Perform the indicated operation and simplify the expression. 5 x 2 + 4 x - 1 4 x + 1 2 x 2 - 1 x 2 + 2 x - 3

(a) When a bullet is fired into a sandbank, its retardation is equal to the square root of its velocity on entering. For how long will it travel if its velocity on entering the bank is 81 m s. 10....

A particle of weight 200 N lies on an inclined plane. The plane is inclined at 30 to the horizontal. A horizontal force F is applied to the particle. The coefficient of friction between the particle...

(a) Define simple harmonic motion. (6) The depth of water above the sea bed in a harbour can be described by simple harmonic motion as the tide comes in and goes out during the day. An anchored boat,...

Use the Internet and/or Strayer Library to research rolling forecasts as an alternative to budgets. Next, take a position as to whether or not a flexible budget approach dilutes the value of a budget...

Limited Liability Partnerships" As discussed in the textbook, large accounting firms and other professional firms operate as limited liability partnerships (LLPs). Compare and contrast the advantages...

Which type of business is likely to have retained earnings? Retailer Maruatarduot Service business All of the above

Ann hires a nanny to watch her two children while she works at a local hospital. She pays the 19-year-old nanny $125 per week for 48 weeks during the current year. a. What is the employer's portion...

Ken (age 31) and Amy (age 28) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to...

Jason and Mary are married taxpayers in 2013. They are both under age 65 and in good health. For this tax year, they have a total of $41,000 in wages and $500 in interest income. Jason and Mary's...

Annual contributions of $1000 will be made to a TFSA for 25 years. The contributor expects investments within the plan to earn 7% compounded annually. What will the TFSA be worth after 25 years if...

Many people make their annual RRSP contribution for a taxation year close to the end of the year. Financial advisers encourage clients to contribute as early in the year as possible. How much more...

Keiko has already accumulated $150,000 in her RRSP. She intends to continue to grow her RRSP by making contributions of $500 at the beginning of every month. How much will her RRSP be worth 15 years...