Question: same question with different independent inputs and variations(A-G) Consider the following information which relates to a given company: Item Earnings Per Share Price Per Share






Consider the following information which relates to a given company: Item Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share 2019 Value $6.86 $35.81 $61 Million 2.4 Million $3.99 Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5%. Required: (a) Determine the firm's current book value per share. Consider the following information which relates to a given company: Item 2019 Value Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share $6.86 $35.81 $61 Million 2.4 Million $3.99 Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5% Required: (b) Determine the firm's P/E ratio. Consider the following information which relates to a given company: Item Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share 2019 Value $6.86 $35.81 $61 24 $3.99 Million Million Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5%. Required: (c) Determine the current required return for the firm's stock. Consider the following information which relates to a given company: Item Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share 2019 Value $6.86 $35.81 $61 Million 2.4 Million $3.99 Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5%. Required: (d) Determine the new required return for the firm's stock. Consider the following information which relates to a given company: 2019 Value Item Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share $6.86 $35.81 $61 2.4 Million Million $3.99 Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5%. Required: (e) Assuming no growth in future dividends, and a required return of 16.45% find the value per share of the firm's stock. Consider the following information which relates to a given company: Item Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share 2019 Value $6.86 $35.81 $61 Million 24 Million $3.99 Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5%. Required: (f) Assuming a constant annual 6% growth rate in future dividends, find the value per share of the firm's stock. The required return is 16.45%. Consider the following information which relates to a given company: Item Earnings Per Share Price Per Share (Common Stock) Book Value (Common Stock Equity) Total Common Stock Outstanding Dividend Per Share 2019 Value $6.86 $35.81 $61 Million 2.4 Million $3.99 Analysts expect that the company could maintain a constant annual growth rate in dividends per share of 6% in the future, or possibly 8% for the next 2 years and 7% thereafter. In addition, it is expected that the risk of the firm, as measured by the risk premium on its stock, to increase immediately from 8.4% to 11%. Currently, the risk-free rate is 5%, Required: (g) Assuming a constant annual 8% growth rate in dividends per share over the next two years and 7% thereafter, find the value per share of the firm's stock. The required return is 16.45%
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