Common stock value: Constant growth Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019, Seagate paid the followingper-share dividends: Year Dividend per share 2019 $2.51 2018 $2.27 2017 $1.83 2016 $1.16 2015 $1.49 Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 19% required rate of return to find the value of Seagate's stock immediately after it paid its 2019 dividend of $2.51.

Common stock value: Constant growth Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019, Seagate paid the followingper-share dividends: Year Dividend per share 2019 $2.51 2018 $2.27 2017 $1.83 2016 $1.16 2015 $1.49 Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 19% required rate of return to find the value of Seagate's stock immediately after it paid its 2019 dividend of $2.51.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter15: Harvesting The Business Venture Investment

Section: Chapter Questions

Problem 7EP

See similar textbooks

Similar questions

Calculation of gL and EPS Spencer Suppliess stock is currently selling for 60 a share. The firm is expected to earn 5.40 per share this year and to pay a year-end dividend of 3.60. a. If investors require a 9% return, what rate of growth must be expected for Spencer? b. If Spencer reinvests earnings in projects with average returns equal to the stocks expected rate of return, then what will be next years EPS? [Hint: gL = ROE Retention ratio.)
Common stock value: Constant growth: Seagate Technology is a global leader in data storage solutions and a consistent dividend payer. From 2018 through 2022, Seagate paid the following per-share dividends: Year Dividend per share 2022 $2.49 2021 2.27 2020 1.83 2019 1.15 2018 1.54 Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 21% required rate of return to find the value of Seagate's stock immediately after it paid its 2022 dividend of $2.49.
Consider the following security: Brous Metalworks Earnings Per Share, Time = 0 $2.00 Dividend Payout Rate 0.250 Return on Equity 0.150 Market Capitalization Rate 0.125 Required: Using the information in the tables above, please calculate the sustainable growth rate, dividends per share, and intrinsic value per share. Then solve for the present value of growth opportunities. (Use cells A5 to B8 from the given information to complete this question.) Brous Metalworks Sustainable Growth Rate Dividends per share (Next Year) Intrinsic Value No-Growth Value Per Share Present Value of Growth Opportunities (PVGO)
Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019,Seagate paid the following per-share dividends: Year Dividend per share 2019 $2.54 2018 2.21 2017 1.81 2016 1.22 2015 1.48 Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 22% required rate of return to find the value of Seagate's stock immediately after it paid its 2019 dividend of $2.54. The value of Seagate's stock is $
Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019, Seagate paid the following per-share dividends: Year Dividend per share 2019 $2.49 2018 2.28 2017 1.86 2016 1.21 2015 1.48 Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 22% required rate of return to find the value of Seagate's stock immediately after it paid its 2019 dividend of $2.49.
(Measuring growth) Given that a firm's return on equity is 17 percent and management plans to retain 37 percent of earnings for investment purposes, what will be the firm's growth rate? If the firm decides to increase its retention rate, what will happen to the value of its common stock? Question content area bottom Part 1 a. The firm's growth rate will be enter your response here%. (Round to two decimal places.)
Over the last 10 years, a firm has had the earnings per share shown in the following table: Years and Earnings per share 2022 4.35 2017 3.092021 4.95 2016 1.552020 3.24 2015 1.782019 2.67 2014 -1.922018 4.35 2013 0.96 . a) If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2018? $1.74 b) If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2018? (enter your response here) c) If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2018? (enter your response here) d) Discuss the pros and…
(Measuring growth) Solarpower Systems earned $20 per share at the beginning of the year and paid out $9 in dividends to shareholders (so, D0=$9) and retained $11 to invest in new projects with an expected return on equity of 19 percent. In the future, Solarpower expects to retain the same dividend payout ratio, expects to earn a return of 19 percent on its equity invested in new projects, and will not be changing the number of shares of common stock outstanding. a. Calculate the future growth rate for Solarpower's earnings. b. If the investor's required rate of return for Solarpower's stock is 15 percent, what would be the price of Solarpower's common stock? c. What would happen to the price of Solarpower's common stock if it raised its dividends to $13 and then continued with that same dividend payout ratio permanently? Should Solarpower make this change? (Assume that the investor's required rate of return remains at 15 percent.) d. What would happened to…
Over the last 10 years, a firm has had the earnings per share shown in the following table: Years and Earnings per share 2022 4.46 2017 2.722021 4.36 2016 1.492020 3.56 2015 1.322019 2.27 2014 -1.642018 3.88 2013 0.55 a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2022? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive years, what annual dividend would the firm pay in 2022? c. If the firm's policy were to pay $0.50 per share each period except when earnings per share exceed $3.00, when an extra dividend equal to 80% of earnings beyond $3.00 would be paid, what annual dividend would the firm pay in 2022?
DONT USE EXCEL CLEARLY SHOW STEPS TO FIND ANSWERS Assume that McGill Inc. is expected to experience supernormal growth of 25 percent for the next 2 years, followed by 15 percent for the year after, and then to return to its long‐run constant growth rate of 4 percent. McGill Inc. most recent dividend was $1.25. The investor’s required rate of return is 11%. ( a) Calculate the current price of the stock. (b) What is the expected dividend yield and capital gains yield in Year 1? (c) What is the expected dividend yield and capital gains yield in Year 4?
(Measuring growth) Solarpower Systems earned $20 per share at the beginning of the year and paid out $8 in dividends to shareholders (so, D0=$8) and retained $12 to invest in new projects with an expected return on equity of 21 percent. In the future, Solarpower expects to retain the same dividend payout ratio, expects to earn a return of 21 percent on its equity invested in new projects, and will not be changing the number of shares of common stock outstanding. a. Calculate the future growth rate for Solarpower's earnings. b. If the investor's required rate of return for Solarpower's stock is 13 percent, what would be the price of Solarpower's common stock? c. What would happen to the price of Solarpower's common stock if it raised its dividends to $12 and then continued with that same dividend payout ratio permanently? Should Solarpower make this change? (Assume that the investor's required rate of return remains at 13 percent.) d. What would happened…
(Measuring growth) Given that a firm's return on equity is 21 percent and management plans to retain 39 percent of earnings for investment purposes, what will be the firm's growth rate? If the firm decides to increase its retention rate, what will happen to the value of its common stock? Question content area bottom Part 1 a. The firm's growth rate will be enter your response here%. (Round to two decimal places.) Part 2 b. If the firm decides to increase its retention ratio, what will happen to the value of its common stock? (Select from the drop-down menus.) An increase in the retention rate will ▼ increase decrease the rate of growth in dividends, which in turn will ▼ increase decrease the value of the common stock.