Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A company paid a dividend yesterday in the amount of $.28 a share. The company plans to double each annual dividend payment for the next three years. After that time, it plans to pay a constant $2.25 per share indefinitely. What is one share worth today if the market
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- A company currently pays a dividend of $2.2 per share (D0 = $2.2). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.1, the risk-free rate is 9.5%, and the market risk premium is 6.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forwardA share of stock pays a constantly growing (end-of-the-year) dividend. If the stock sells for $73.31/share today, the dividend to be paid in exactly one year (at t=1) is $2.61, and the total return required by investors (in the stock) is 13.09%, at what price should each share sell in exactly 4 years (at t=4)?arrow_forwardA&T, Inc. paid an annual dividend of $1.47 per share last month. The company is planning on paying $1.56, $1.68, and $1.75 per share over the next three years, respectively. After that, the dividend will be constant at $1.80 per share per year. What is the market price of this stock if the market rate of return is 12 percent? $13.98 $14.65 $13.54 $14.16 O None of these answers are correctarrow_forward
- XYZ, Inc. is expected to pay a dividend of $5 which is expected to grow at a constant annual rate of 5%. What is the expected rate of return on this stock if it currently sells at $43 per share? Show your answer in percent to one decimal.arrow_forwardShocktown Inc. paid a dividend of $1.20 last year. The company expects to increase the dividend at a constant rate of 5% per year, indefinitely. The stock price is $10.68 currently, with a beta of 1.2. The market risk premium is 9% and the risk-free rate is 6%. What will the price of Shocktown's stock be if the market risk premium falls to 8%? $12.87 $11.32 $11.89 $12.43 Click the answer you think is right.arrow_forwardThe Fl Corporation's dividends per share are expected to grow indefinitely by 8% per year. Required: a. If this year's year-end dividend is $3.00 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? Note: Round your answer to 2 decimal places. b. If the expected earnings per share are $9.00, what is the implied value of the ROE on future investment opportunities? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Current stock price b. Value of ROE c. Amount % per sharearrow_forward
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