Sisters Corp expects to earn $6 per share next year. The firm's ROE is 15% and its plowback ratio is 70%. If the firm's market capitalization rate is 12% a. Calculate the price with the constant dividend growth model. b. Calculate the price with no growth

Q: Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $2.25 at…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Topstone Industries is expected to pay a dividend of $2.10 per share in one year. This dividend,…

A: Cost of equity Ke=D1MP+g Ke=Cost of equity D1=Expected dividend per share at the end of the year…

Q: Acetate, Inc. has equity with a market value of $20 million and debt with a market value of $10…

A: Debt to equity ratio  = Debt Market value / Equity Market value

Q: BIG TECH Inc. sells at $40 per share, and its latest 12-month earnings were   $8 per share, of…

A:

Q: IBM expects to pay a dividend of $6 next year and expects these dividends to grow at 3.92% a year.…

A: Cost of equity by dividend growth model: Cost of equity = D1/P0 + g D1 is expected dividend P0 is…

Q: Summit Systems will pay an annual dividend of $1.59 this year. If you expect Summit's dividend to…

A: Gordon dividend growth model is used to value a stock who's dividends are expected to grwo at a…

Q: Summit Systems will pay a dividend of $1.48 this year. If you expect​ Summit's dividend to grow by…

A: Expected dividend (D1) = $1.48 Growth rate (g) = 5.3% Cost of capital (r) = 10.7%

Q: Corner Company is estimated to generate $18 million in available cash flow in the first year, and…

A: First year cash inflow  = $ 18,000,000 Annual growth rate (G) = 5% WACC = 9% Number of shares (N) =…

Q: Upsilon Utilities Inc. expects a constant growth rate of 2% in its dividend payments. If the company…

A: The expected dividend in year 1 (D1) is $3. The growth rate (g) is 2%. The current share price (P)…

Q: By how much would the cost of new stock exceed the cost of retained earnings?

A: Retained earnings are the revenues or profits that an organization has produced to date, less any…

Q: Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 28 percent for the next…

A: As per Dividend Discount Model, P0= D1 / (ke-g) Where D1 = Expected Dividend ke = Expected Return g…

Q: A firm will pay an annual dividend of $6 on its common stock in one year, and its dividend will grow…

A: Next dividend (D1) = $6 Growth rate = g Stock price (P0) = $88 Cost of equity (r) = 12%

Q: Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.45 at…

A: Given details are : Expected Dividend (D1) = $1.45 Growth rate (g) = 8.50% = 0.085 Current Stock…

Q: Finance, Inc. has equity with a market value of $30 million and debt with a market value of $15…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: An analyst is trying to estimate the intrinsic value of VN Co. that has a weighted average cost of…

A: Let WACC = r = 10% FCF1 = P 3000 FCF2 = P 4000 FCF3 = P 5000 Growth rate after year 3 (g) = 6%

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: The required rate of return for Ola Industries is 15.75 percent. The stock pays a current dividend…

A: This question require us to calculate the estimated price of the stock of Ola industries. We can…

Q: MCK Bhd paid a dividend of RM2 per share last year. The growth rate in dividend is expected to be 4%…

A: given, D0=RM2r=10%g=7% The growth rate in dividend is expected to be 4% for the first year, 5% for…

Q: . HighGrowth Company has a stock price of $19. The firm will pay a dividend next year of $0.88​, and…

A: Next dividend  (D1) = 0.88 Current price (P0) = $19 Growth rate (G) = 4.1%

Q: Houston Tools has expected earnings before interest and taxes of $189,400, an unlevered cost of…

A: A levered firm is one which has debt and an unlevered firm is one which has no debt. We will use the…

Q: Storico Co. just paid a dividend of $2.65 per share. The company will increase itsdividend by 20…

A: Calculation of Price of Stock Today:Excel Spreadsheet:

Q: Ingram Micro Company forecasts income of $7.40 per share and will pay out 30% as dividends, 20% as a…

A: Income= $7.40 per share Dividend Payment= 30% Share repurchase= 20% Growth rate= 5.6 % Required…

Q: An analyst is trying to estimate the intrinsic value of Blue Co. that has a weighted average cost of…

A: Cost of Capital  = 10% Free Cash Flows: Year Free cash flow 1 3000 2 4000 3 5000…

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

A: The dividend discount model is used to calculate the current the price of stock by adding of all of…

Q: Eastern Electric currently pays a dividend of about $1.78 per share and sells for $27 a share. If…

A: We need to compute the growth rate in this question. We can solve this question using Dividend…

Q: Sorenson Systems, Inc. is expected to pay a dividend of $3.30 at year end (D1), the dividend is…

A: Wacc is the weighted average cost of capital

Q: Arts and crafts will pay a divided of $5 per share in 1 year. It sells at $50 a share, and firms in…

A: As per dividend discount model, Price of stock = Dividend at the end of year 1 /(expected return -…

Q: Sims Manufacturing is expected to generate $195 million in free cash flow next year, and FCF is…

A: In this problem, First, we will compute the present value of free cash flows which will b the firm…

Q: HighGrowth Company has a stock price of $18. The firm will pay a dividend next year of $1.15, and…

A: Stock price (P0) = $18 Next dividend (D1) = $1.15 Growth rate (g) = 3.5%

Q: CompuCon is a new firm that just paid an annual dividend of $2.25 per share. The firm plans to…

A: Dividend discount model: It is based on an assumption that the existing stock price of any company…

Q: You are told by yourinvestment advisor that Laduma Co. is expected to earn R5 per share next year,…

A: Dividend growth model is the valuation model that calculates the fair value of the stock on the…

Q: Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a…

A: Given: Growth rate = 5.6% Market price = $13.16 Required return = 14%

Q: Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to…

A: Cash dividend refers to the net amount of dividend that a company pays to its shareholders in the…

Q: You are told by your investment advisor that Ladumo Co. is expected to earn R5 per share next year,…

A: Calculation of value of the stock: Answer: Total value of stock is R47.33

Q: Sims Manufacturing is expected to generate $180 million in free cash flow next year, and FCF is…

A: Calculation of stock’s value per share: Answer: Stock value per share is $5.14

Q: Eastern Electric's recent annual dividend was $1.64 per share and its stock currently sells for…

A: Dividend growth model is used to value companies stock and calculate return on equity. By Dividend…

Q: Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20%?…

A: PVGO means present value of growth opportunities. It is a method of valuation applied to growing…

Q: Antiques "R" Us is a mature manufacturing firm. The company just paid a dividend of $11.30, but…

A: The price of a share today is the intrinsic value of share which can be determined by discounted…

Q: The Airasiang Berhad is expected to pay a dividend of RM1.25 per share at the end of the year, and…

A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…

Q: Summit Systems will pay a dividend of $1.50 this year. If you expect Summit’s dividend to grow by 6%…

A: The below expression can be used to calculate price per share:

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.