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SCI just paid a dividend (Do) of $2.16 per share, and its annual dividend is expected to grow at a constant rate (g) of4.50% per year. If the required return (rs) on SCI's stock is 11.25%, then the intrinsic value of SCI's shares isper share.Which of the following statements is true about the constant growth model?The constant growth model implies that dividend growth remains constant from now to infinity.The constant growth model implies that dividends remain constant from now to a certain terminal year.Use the constant growth model to calculate the appropriate values to complete the following statements about SuperCarpeting Inc.:If SCI's stock is in equilibrium, the current expected dividend yield on the stock will beper shareSCI's expected stock price one year from today will beper shareIf SCI's stock is in equilibrium, the current expected capital gains yield on SCI's stock will be

Question
SCI just paid a dividend (Do) of $2.16 per share, and its annual dividend is expected to grow at a constant rate (g) of
4.50% per year. If the required return (rs) on SCI's stock is 11.25%, then the intrinsic value of SCI's shares is
per share.
Which of the following statements is true about the constant growth model?
The constant growth model implies that dividend growth remains constant from now to infinity.
The constant growth model implies that dividends remain constant from now to a certain terminal year.
Use the constant growth model to calculate the appropriate values to complete the following statements about Super
Carpeting Inc.:
If SCI's stock is in equilibrium, the current expected dividend yield on the stock will be
per share
SCI's expected stock price one year from today will be
per share
If SCI's stock is in equilibrium, the current expected capital gains yield on SCI's stock will be
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SCI just paid a dividend (Do) of $2.16 per share, and its annual dividend is expected to grow at a constant rate (g) of 4.50% per year. If the required return (rs) on SCI's stock is 11.25%, then the intrinsic value of SCI's shares is per share. Which of the following statements is true about the constant growth model? The constant growth model implies that dividend growth remains constant from now to infinity. The constant growth model implies that dividends remain constant from now to a certain terminal year. Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting Inc.: If SCI's stock is in equilibrium, the current expected dividend yield on the stock will be per share SCI's expected stock price one year from today will be per share If SCI's stock is in equilibrium, the current expected capital gains yield on SCI's stock will be

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check_circleAnswer
Step 1

Calculate the intrinsic value per share as follows:

Dox (1+g)
r-g
$2.16x(1+4.50%)
=
11.25%-4.50%
$2.2572
0.0675
$33.44
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Dox (1+g) r-g $2.16x(1+4.50%) = 11.25%-4.50% $2.2572 0.0675 $33.44

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Step 2

The statement “The constant growth model implies that dividends growth rate remains constant from now to infinityis true.

Step 3

Calculate the expected divid...

Dividend yield
$2.2572
$33.44
0.0675 or 6.75%
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Dividend yield $2.2572 $33.44 0.0675 or 6.75%

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