Question: TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has just paid a dividend of 50 cents per

TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has just paid a dividend of 50 cents per share. Dividends are expected to grow at a rate of 5 percent per year for the next four years. Assume that the required rate of return for TelTec stock is 15 percent.

a. What is the expected constant growth rate beginning in year 5?

b. What will the price of TelTec stock be five years from now?

c. What is TelTec's current stock price?

Step by Step Solution

★★★★★

3.39 Rating (168 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Time line a Calculating g 2 b Calculating price of XYZ 5 years from now c Curren... 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)

413-B-C-F-C-V (763).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

The Webster Company has just paid a dividend of $5.25 per share. The company will increase its dividend by 14 percent next year. The company will then reduce its dividend growth rate by 3 percent...

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. If investors...

A share of common stock has just paid a dividend of $2.00. If the expected long-run growth rate for this stock is 7%, and if investors require a (n) 11% rate of return, what is the price of the...

49. (LO 73) TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has just paid a dividend of 50 cents per share. Dividends are expected to grow at a rate of 5 percent...

R THE FOLLOWING MULTIPLE CHOICE QUESTIONS: [MARK THE MOST APPROPRIATE Which of the following rated bonds have the least rik? Bond rating is mainly ANSWER ,4 a measure of rate risk b. re-investment...

Mr. Bond is considering purchasing a bond with 10-year maturity and $1,000 face value. The coupon interest rate is 8% and the interest is paid annually. If Mr. Bond requires 12% yield to maturity on...

1.Mr. Bond is considering purchasing a bond with 10-year maturity and $1,000 face value. The coupon interest rate is 8% and the interest is paid annually. If Mr. Bond requires 12% yield to maturity...

Need help solving my homework problems listed below Die Business Finance FIN 3200 ASSIGNMENT #3 Show all work including time lines for full credit Aher the dividend payment the stock is expected to...

Business Finance FIN 3200 ASSIGNMENT #3 Show all work including time lines for full credit] 1. Company X is expected to pay an year-end dividend of $5 a share on its common stock. After the dividend...

5. Metallica Bearings, Inc. is a young start-up company. No dividends will be paid on the stock over the next 20 years because the firm needs to plow back its earnings to fuel growth. The company...

What information is necessary to analyze a queuing system?

After watching these videos answer the following questions: http://www.youtube.com/watch?v=J2kEXPzAn6o http://www.youtube.com/watch?v=vjS0Novt3X4 What is the conclusion of Olbermann's argument? Cite...

Shevanne is 6 3 years old and complains that high - pitched sounds, such as " 5 " or " th " are hard to distinguish and conversations are difficult to understand, particularly when there is...

PART 1: This assignment requires you to identify the behavioral analysis questions and evaluate the response for truthfulness or deception. Here are some of the case facts: The Interviewee is a...

Wing Yin Tsui, CEO of Lian Huang & Wong Bin Dean Hwang Manufacturing Limited is considering a four year project. The project requires an initial investment of $10,000,000 to buy new equipment. The...

5. Auditors often utilize sampling methods when performing tests of controls. Which of the following sampling methods is most useful when testing account balances? a. Attribute sampling b. Variable...

10. On October 31, 2022, a local newspaper signed a one-year agreement with an advertising agency where they will print retail advertisements in their daily newspaper and receive a monthly fee of...

Sprouts Farmers Market Wendys Company QUESTION The COVID-19 pandemic affected companies in the food industry in unique ways, particularly during 2020. Ruth's Hospitality Group (Ticker:...

In Project Closure phase, teams open a project when they deliver the finished project to the customer, communicating completion to stakeholders and releasing resources to other projects. A. True B. *...

Upon graduation you receive a job offer from Pronto Manufacturing Incorporated. Duties listed with this job position include responsibilities in implementing the policy and management of cash...

What is float? What are its four basic components? Which of these components is the same from both a collection and a payment perspective? What is the difference between availability float and...

What is cash position management? What types of firms set a target cash balance? Why? What is the purpose of a banks requiring the firm to maintain a minimum balance in its checking account? How does...

Global Toys Inc. imposes a payback cutoff of three and a half years for its international investment projects. If the company has the following two projects available, should it accept either of...

if you borrowed $8,000 to buy a car with a 5-year loan at 5% APR what would be the amount of payment each month

sample of n = 7 professionalbaseball players gave the followung Information. 0.251 0.261 0.286 0.263 0.268 0.339 0.299 1.6 3.8 5.5 3.8 3.5 7.3 5.0 (a) Make a scatter diagram of the data. r (b) Use a...