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- Start with the partial model in the file Ch07 P27 Build a Model.xlsx on the textbook’s Web site. Hamilton Landscaping’s dividend growth rate is expected to be 30% in the next year, drop to 15% from Year 1 to Year 2, and drop to a constant 5% for Year 2 and all subsequent years. Hamilton has just paid a dividend of $2.50, and its stock has a required return of 11%. What is Hamilton’s estimated stock price today? If you bought the stock at Year 0, what are your expected dividend yield and capital gains for the upcoming year? What are your expected dividend yield and capital gains for the second year (from Year 1 to Year 2)? Why aren’t these the same as for the first year?Y6 Consider a stock priced at $40 that pays an annual dividend of $ 1 per share. An investor purchases the stock on margin, paying $20 per share and borrowing the remainder from the brokerage firm at 10 percent annual interest. a. If, after one year, the stock is sold at a price of $60 per share, what is the return on the stock? b. If investors had used only personal funds rather than borrowing funds, what would have been the stock return?An investor who wishes to purchase the stock belonging to Entity A to hold for two years will receive a dividend of $ 0.7 per share for the first year, $ 1.3 for the second year from this investment, and at the end of the second He estimates that it can be sold for $ 12.0 USD. What is the real value of the stock if the minimum rate of return expected by the investor is 20%? a) 15b) 2.81c) 9.81d) 21.81e) 5.81 ============= If the discount rate is 9%, what is the present value of 5375 USD received at the end of each year for 12 years?a) 25000,375b) 10000,5c) 12450,5d) 15500,375e) 38490,375 ============== The price / earnings ratio of the beta company stock has been calculated as 7.4. If the expected earnings per share of this stock for the next year is 2.5 USD, what is the real value of the stock? If the stock of this company is currently trading at 25 USD, can the relevant stock be purchased? a) 18.5 and should not be boughtb) 36 and must be purchasedc) 45 and must be purchased d) 18.5…
- 2. Preferred Products has issued preferred stock with an $8 annual dividend that will be paid in perpetuity. a. If the discount rate is 12%, at what price should the preferred sell? (Round your answer to the nearest cent.) b. At what price should the stock sell one year from now? (Round your answer to the nearest cent.) c. What is the dividend yield, the capital gains yield, and the expected rate of return of the stock? (Round your answer to the nearest whole number. If no entry is required, please, enter zero ("0").)Islander Corporation's common stock will pay a dividend of $3.50 one year from now. You plan to buy the stock now and sell at the end of one year for $70. At what price must you buy in order to receive your required return of 18%? Solve using excelSuppose you bought XYZ stock 1 year ago for $6.54 per share and sell it at $2.79. You also pay a commission of $0.35 per share on your sale. What is the total return on your investment? The total return is %?
- The economic or intrinsic value of a preferred stock is equalto the present value of all future dividends. PV of perpetuity equation 6. Assume INGA’s preferred stock pays an annualdividend of $3.75 and the investors required rate ofreturn is 6%. Given the market price of the preferredstock is RM68, should you buy the stock? 7. If preferred stock pays dividend 4% on its parvalue of $100 and your required rate of return is7%, what is the value of the preferred stock? 8. You own 250 shares of Dalton Resources preferred stock whichcurrently sells for $38.50 per share and pays annual dividend of $3.25per share. The required return on preferred stock is 8%. Given thecurrent market price, should you sell or buy more stock?steady As She Goes Inc. will pay a year-end dividend of $2.70 per share. Investors expect the dividend to grow at a rate of 5% indefinitely. a. If the stock currently sells for $27.00 per share, what is the expected rate of return on the stock? b. If the expected rate of return on the stock is 17.50%, what is the stock price?Jenny Banks is interested in buying the stock of Fervan, Inc., which is increasing its dividends at a constant rate of 9.0 percent. Last year the firm paid a dividend of $2.65. The required rate of return is 17.0 percent. What is the current value of this stock? What should be the price of the stock in year 5?
- Suppose that you are willing to pay $450.33 today for a share of stock which you expect to sell at the end of one year for $500.25. If you require an annual rate of return of 15 percent, what should be the estimate of the amount of the annual dividend which you expect to receive by the end of Year 1 prior to the sale of the stock? Assume that the estimated return equals the required rate of return. Options: a. $17.63 b. $1.60 c. $10.99 d. $19.25 e. $3.60if the interest rate used in 5% how much would people be willing to pay for a share of stock that is expected to yield a $20 per share stream of dividend each year go to continuously into future quizlet 20 200 400 4000
