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Let’s say that you are considering an investment in the common stock of QuickFix Enterprises and are convinced that its last paid dividend of $1.25 will grow at its historical average growth rate from here on. Using the past 10 years of dividend history and a required rate of return of 14%, calculate the price of QuickFix’s common stock. Quick Fix Dividend History / Annual 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $0.50 $0.55 $0.61 $0.67 $0.73 $0.81 $0.89 $0.98 $1.08 $1.25

Let’s say that you are considering an investment in the common stock of QuickFix Enterprises and are convinced that its last paid dividend of $1.25 will grow at its historical average growth rate from here on. Using the past 10 years of dividend history and a required rate of return of 14%, calculate the price of QuickFix’s common stock. Quick Fix Dividend History / Annual 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $0.50 $0.55 $0.61 $0.67 $0.73 $0.81 $0.89 $0.98 $1.08 $1.25

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 5P
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Let’s say that you are considering an investment in the common stock of QuickFix Enterprises and are convinced that its last paid dividend of $1.25 will grow at its historical average growth rate from here on. Using the past 10 years of dividend history and a required rate of return of 14%, calculate the price of QuickFix’s common stock.


Quick Fix Dividend History / Annual

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

$0.50

$0.55

$0.61

$0.67

$0.73

$0.81

$0.89

$0.98

$1.08

$1.25
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