Question: Please show calculation oh how to solve these problems. 1. You are valuing a common stock that just paid a dividend of $1.25 per share.

Please show calculation oh how to solve these problems.

1. You are valuing a common stock that just paid a dividend of $1.25 per share. You are expecting the stock to grow at the rate of 4% annually, and the stock to give you a return of 9%. What should be the price of the stock? Round to the nearest cent. Do not include the dollar sign in your answer. (i.e. If your answer were $1.23, then type 1.23 without a $ sign)

2. The price of NetFlex stock is $54.54; its expected dividend next year is $6, and its constant annual growth rate thereafter is 5%. What is the required rate of return on the stock? Answer in percent format. Round to the nearest hundredth percent. Do not include the percent sign in your answer. (i.e. If your answer were 1.23%, then type 1.23 without a % sign)

3.

Cougar Auto is expecting its earnings and dividends to grow at a rate of 19% over the next 5 years. After the period, the firm is expecting to grow at the industry average of 5% indefinitely. If the firm recently paid a dividend of $1.25, and the required rate of return is 12%, what is the most you should pay for this company's stock? Round to the nearest cent. Do not include the dollar sign in your answer. (i.e. If your answer were $1.23, then type 1.23 without a $ sign)

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!