Everest Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product.  Management expects earnings and dividends to grow at a rate of 28% for the next 2 years, 21.90% in year 3 and 4 and after which competition will probably reduce the growth rate in earnings and dividends to constant growth rate of 5.00%.  The company’s last dividend was $0.85, its beta is 1.25, the market risk premium is 7.00%, and the risk-free rate is 6.50%.  What is the current price of the common stock?

Q: years, after which growth should match the 5.80% industry average growth rate, which is a more…

A: Year 1 dividend = 1.41 (1 + 12.4%) = 1.58484 Year 2 dividend = 1.58484 (1 + 12.4%) = 1.78136Year 3…

Q: Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Computation:

Q: Yam-Hash Corporation is expanding rapidly, and it does not pay any dividends because it currently…

A: Value of stock today is the present value of future cashflows

Q: Riker Departmental Stores management has forecasted a growth rate of 40 percent for the next two…

A: Using dividend discount model,

Q: An analyst uses a two-stage variable growth model to estimate the value of Old Maid Company's common…

A: Note: No intermediate rounding is done for calculation in the successive steps.   a) Dividend for…

Q: What is the current price of the common stock?

A: Horizon value is also called as terminal value of the stock. It is the present value of stock when…

Q: Tre-Bien, Inc., is a fast-growing technology company. Management projects rapid growth of 30 percent…

A: using dividend discount model

Q: NASHORA Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: The dividends growth rate for the next 3 years = 20% Growth rate in dividends reduced to 10% D0 =…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Dividend year 3(D3)=1 Growth rate Year 4&5 = 25%  Growth rate after Year 5=7% Required return =…

Q: Hallo Ltd. is presently enjoying relatively high growth because of a surge in the demand for its new…

A: Current price of the common stock is calculated using the dividend discount model. For that first we…

Q: Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Dividend discount model refers to a stock valuation model which is used by the company for…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Given, D3=$0.75 Growth rate (year 4 & 5)=24% Growth rate (after year 5)=5%

Q: Sawchuck Consulting has been profitable for the last 5 years, but it has never paid a dividend.…

A: given, D3=$0.25 D4= $0.38 D5= $0.48 D6= $0.52 r = 11% g = 8%

Q: Day and Associates is experiencing a period of abnormal growth. The last dividend paid by Day was…

A: As per Dividend Discount Model, P0= D1 / (ke-g)WhereD1 = Expected Dividendke = Expected Returng…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: The price of share today will be calculated by using dividend  discount model. The perpetuity Value…

Q: Yam-Hash Corporation is expanding rapidly, and it does not pay any dividends because it currently…

A: As per Dividend Discount Model,P0= D1 / (ke-g)WhereD1 = Expected Dividendke = Expected Returng…

Q: As an electric utility company, Arbot Industries is expected to maintain a constant dividend payout…

A: Last year EPS = $4.50 Payout ratio = 65% Last dividend (D0) = EPS*Payout ratio…

Q: Everest Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Dividend  $                        0.85 Growth Rate for 2 years 32% Growth Rate for 2 years…

Q: Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 32 percent for the…

A: A dividend refers to the yield that investors (shareholders) receive periodically for bearing the…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Formulas:

Q: ABC Technologies has been growing quite rapidly in recent years and has a growth potential of 27%…

A: Value of stock using earning approach will be present value of all EPS and present value of terminal…

Q: Everest Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: The rate of return that is expected by investors on their equity investment is term as the cost of…

Q: to grow at a rate of 25 percent for the next four years. The company recently paid a dividend of…

A: Dividend is paid out off the profit of the company to the shareholders.

Q: Shell is experiencing rapid growth. Earnings and dividends are expected to grow at a rate of 15%…

A: The last dividend = $1.15 Growth Rate at year 1 = 15% Growth Rate at year 2 = 15% Growth Rate at…

Q: omputech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Solution Concept Using Gordons growth model , the present value of stock paying dividend with…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: The dividend after 3 years is $1.75. Future dividends can be calculated with the help of the below…

Q: Riker Departmental Stores management has forecasted a growth rate of 40 percent for the next two…

A: Computation of dividend per share at the end of each year is as follows:

Q: Yam-Hash Corporation is expanding rapidly, and it does not pay any dividends because it  currently…

A: P0 = D0(1+g) or D1/(Ke - g)

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Required Return = 17% Dividend in year 3 = 0.50 Dividend growth rate in year 4 and 5 = 19% Perpetual…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A:

Q: Riker Departmental Stores management has forecasted a growth rate of 40 percent for the next two…

A: given, D0=$3.12r=14%g1-2=40%g3=25%g4=20%g=7.5%

Q: YZ Inc. is experiencing rapid growth. Earnings and dividends are expected to grow at a rate of 17%…

A: Introduction Dividend discount model: As per dividend discount model, stock should be valued as per…

Q: Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings, hence…

A: Formulas:

Q: Treet Corporation is expanding rapidly, and it currently needs to retain all of its earnings, hence…

A: First of all, we will have to find the horizon value (P5), that is that price of stock at the end of…

Q: Sandhill Departmental Stores management has forecasted a growth rate of 40 percent for the next two…

A: Current value is the present value of the future cash flows from that stock. Following is the…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Price = [ Dividend3 / ( 1 + Required rate )3 ] + [ Dividend4 / ( 1 + Required rate )4 ] + […

Q: Everest Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Required return = Risk free rate + (Beta*market risk premium) Required return = 4.50% + (1.75*6.55%)…

Q: Shell is experiencing rapid growth. Earnings and dividends are expected to grow at a rate of 15%…

A: Given data; Growth rate at year 1 = 15% growth rate at year 2 = 15% growth rate  at year 3 = 13%…

Q: Everest Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Calculate the required return as follows: Required return = Risk free rate + (Beta * Market risk…

Q: Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Expected rate of return = Risk free rate + (Beta*market risk premium) Expected rate of return =3% +…

Q: Tre-Bien, Inc., is a fast-growing technology company. Management projects rapid growth of 30 percent…

A: the given information 30 percent for the next two years growth rate of 17 percent for the following…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: The dividend discount model is a model formulated by Myron J. Gordon, which is used to forecast the…

Q: Yam-Hash Corporation is expanding rapidly, and it does not pay any dividends because it currently…

A: As per Dividend Discount Model,P0= D1 / (ke-g)WhereD1 = Expected Dividendke = Expected Returng…

Q: Matteo Company was expected to pay a $4.00 dividend in the coming year, dividends were expected to…

A: The price of stock can be calculated as the present value of dividends based on required of stock…

Q: Everest Inc. is presently enjoying relatively high growth because of a surge in the demand for its…

A: Given data: Last dividend (D0) = $ 1.60 Growth rate for year 1 and 2 (g1 and g2) = 32% Growth rate…

Q: IoT Inc., is in the business of measuring Southwest Water’s water demand in Exeter. At the end of…

A: Dividend at end of year = 4 Retention Rate = 40% Dividend Payout Ratio = 1-Retention Rate = 1 - 40%…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Frist we need to calculate future value of stock(after 5 years) by using this equation Value of…