Question: Suppose In a Found Ltd. just issued a dividend of $1.43 per share on its common stock. The company paid dividends of $1.05, $1.12, $1.19,

Suppose In a Found Ltd. just issued a dividend of $1.43 per share on its common stock. The company paid dividends of $1.05, $1.12, $1.19, and $1.30 per share in the last four years. If the stock currently sells for $45, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends? What if you use the geometric average growth rate?

Step by Step Solution

★★★★★

3.33 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Given data Current dividend 143 Dividends Y... 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

Document Format (1 attachment)

1143-B-C-F-S-V(764).xlsx

300 KBs Excel File

Students Have Also Explored These Related Corporate Finance Questions!

Estimate the DCF Growth Rate suppose in a snap Ltd, just issued a dividend of $1.25 per share on its common stock. The company paid dividends of $.85, $.90, $1.04, and $1.10 per share in the last...

Suppose Ramirez Ltd. Just issued a dividend of $1.89 per share on its common stock. The company paid dividends of $1.47, $1.62, $1.67, and $1.78 per share in the last four years. If the stock...

Suppose Stark, Ltd., just issued a dividend of $2.08 per share on its common stock. The company paid dividends of $1.71, $1.82, $1.93, and $1.99 per share in the last four years. If the stock...

of equity? 4. Estimating the DCF Growth Rate [LO 11 Suppose In a Found Ltd. just issued a dividend of $1.43 per share on its common stock. The company paid dividends of $1.05, $1.12, $1.19, and $1.30...

Suppose in a Found Ltd. just issued a dividend of $1.43 per share on its common stock. The company paid dividends of $1.05, $1.12, $1.19, and $1.30 per share in the last four years. If the stock...

Estimating the DCF Growth Rate . Suppose In a Found Ltd. just issued a dividend of $1.43 per share on its common stock.The company paid dibidends of $1.05, $1.12, $1.19, and $1 30 per share in the...

Suppose In a Found Ltd. just issued a dividend of $1.91 per share on its common stock. The company paid dividends of $1.60, $1.66, $1.73, and $1.84 per share in the last four years. If the stock...

Suppose In a Found Ltd. just issued a dividend of $2.79 per share on its common stock. The company paid dividends of $2.30, $2.53, $2.60, and $2.71 per share in the last four years. If the stock...

1. A piece of newly purchased industrial equipment costs $969,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual...

Suppose In a Found Ltd. just issued a dividend of $1.73 per share on its common stock. The company paid dividends of $1.40, $1.47, $1.54, and $1.65 per share in the last four years. If the stock...

(a) Show that for a wave on a string, the kinetic energy per unit length of string is Where /L is the mass per unit length. (b) Calculate Uk(X, t) for a sinusoidal wave given by Eq. (15.7). (c) There...

A river with 400 ppm of salts (a conservative substance) and an upstream flow of 25 m/s receives an agricultural discharge of 5 m/s carrying 2000 mg/L salts. The salts quickly become uniformly...

An expenditure for general obligation long - term debt is always recorded at year - end in thegovernmental funds fora. accrued interest and accrued principal.b . accrued principal but not accrued...

_______________ is defined as the degree to which a set of inherent characteristics fulfill requirements. A. Fitness for use B. Conformance to requirements C. Metrics D. Quality

The next dividend payment by Dizzle, Inc., will be $2.48 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. If the stock currently sells for $39.85 per share,...

Find the quote for the Laclede Group. Assume that the dividend is constant. What was the highest dividend yield over the past year? What was the lowest dividend yield over the past year? (The 52-week...

According to the 2015 Value Line Investment Survey, the growth rate in dividends for IBM for the next five years is expected to be 7.5 percent. Suppose IBM meets this growth rate in dividends for the...

ANSWER A AND B WITH SOLUTIONS: A. Find the value of n and r of the following: If C (n, r) = 1 and P (n, r) = 120 If C (n, r) = 20 and P (n, r) = 120 If C (n, r) = 28 and P (n, r) = 56 If C (n, r) = 3...

1. Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $17,081.85 that will pay them $2,500 per...

What is the purpose for using the following techniques?: Factorial ANOVA Multiple Linear Regression Linear Regression Exploratory Factor Analysis