Homework Help is Here – Start Your Trial Now!
Business
Finance
Ten years ago, Video Toys began manufacturing and selling coin-operated arcade games. Dividends are currently $1.50 per share, having grown at a 13 percent compound annual rate over the past 5 years. That growth rate is expected to be maintained for the next 3 years, after which dividends are expected to grow at half that rate for 3 years. Beyond that time, Video Toys’s dividends are expected to grow at 4 percent per year. What is the current value of a share of Video Toys common stock if your required rate of return is 19 percent? Use Table II to answer the question. Do not round intermediate calculations. Round your answer to the nearest cent. $  ______?

Ten years ago, Video Toys began manufacturing and selling coin-operated arcade games. Dividends are currently $1.50 per share, having grown at a 13 percent compound annual rate over the past 5 years. That growth rate is expected to be maintained for the next 3 years, after which dividends are expected to grow at half that rate for 3 years. Beyond that time, Video Toys’s dividends are expected to grow at 4 percent per year. What is the current value of a share of Video Toys common stock if your required rate of return is 19 percent? Use Table II to answer the question. Do not round intermediate calculations. Round your answer to the nearest cent. $  ______?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 23E: Refer to 10.22. If the imputed interest rate is 6%, what is Anders Company residual income for the...
See similar textbooks
icon
Related questions
icon
Concept explainers
Topic Video
Question

Ten years ago, Video Toys began manufacturing and selling coin-operated arcade games. Dividends are currently $1.50 per share, having grown at a 13 percent compound annual rate over the past 5 years. That growth rate is expected to be maintained for the next 3 years, after which dividends are expected to grow at half that rate for 3 years. Beyond that time, Video Toys’s dividends are expected to grow at 4 percent per year. What is the current value of a share of Video Toys common stock if your required rate of return is 19 percent? Use Table II to answer the question. Do not round intermediate calculations. Round your answer to the nearest cent.

$  ______?

 

TABLE II Present Value Interest Factor (PVIF) (S1 at i % per period for n periods): PVIF = (1+ PV = FV,(PVIF,a) Period, n 1% 1.000 3% 1.000 1.000 0.980 0.971 2% 4% 1.000 0.962 5% 1.000 6% 7% 8% 9% 10% 1.000 11% 1.000 12% 13% 1.000 0.943 1.000 0.935 1.000 0.926 0.857 0.794 1.000 0.917 1.000 0.893 0.797 0.712 0.636 1.000 0.885 0.990 0.980 0.971 0.952 0.909 0.901 0.961 0.943 0.942 0.915 0.907 0.864 0.812 0.731 0.659 0.593 0.783 0.693 0.613 0.543 0925 0.890 0.873 0.816 0.842 0.826 0.751 3 0.889 0.855 0.772 0.708 0.650 0.596 0.47 0.502 0.840 0.924 0.889 0.906 0.863 0.823 0.784 0.746 4 0.792 0.961 0.951 0.763 0.735 0.681 0.683 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.747 0.713 0.666 0.623 0.621 0.564 0.513 0567 0.507 0.452 0.888 0.838 0.871 0.813 0.853 0.789 0.837 0.766 0.705 0.665 0.627 0.592 0.58 0.527 0.497 0.469 0.442 0.417 0.535 0.482 0.434 0.480 0.425 0.942 0.630 0.933 0.923 0.914 O.583 0.540 0.711 0.677 0.582 0.544 0.467 0.404 0.376 033 0.295 0.261 0.645 10 11 0.508 0.475 0.500 0.463 0.460 0.422 0.424 0.386 0.350 0.391 0.352 0.317 0.361 0.322 0.905 0.820 0.744 0.804 0.722 0.614 0.896 0.887 0.585 0.557 0.429 0.397 0.388 0.287 0.257 0.229 0.205 0.183 0.788 0.701 0.773 0.681 0.286 0.258 0.232 0.209 0.231 0.204 0.181 12 13 0.625 0.601 0.444 0.356 0.319 0.879 0.530 0.758 0.661 0.743 0.642 0577 0.555 0534 0.415 0.388 0.362 0.368 0.340 0.326 0.299 0.290 0.263 0.239 0.505 0.481 14 0.870 15 0.315 0.292 0275 0.252 0.160 0.141 0.861 0.218 0.198 0.180 0.164 0.188 0.170 0.153 0.138 0.124 0.853 16 17 0.728 0.623 0.714 0.605 0.700 0.587 0.458 0.436 0.416 0.394 0.371 0.339 0.163 0.844 0513 0.494 0.317 0.270 0.250 0.231 0.212 0.296 0.276 0.258 0.197 0.146 0.130 0.116 0.104 0.066 0.125 0.111 0.098 0.087 18 19 0.836 0.350 0.331 0.828 0.820 0.686 0.570 0.673 0554 0.622 0.492 0.396 0.377 0310 0232 0.215 0.194 0.178 0.126 0.475 20 24 0.456 0.312 0.149 0.788 0.780 0.390 0.375 0.308 0.295 0.231 0.142 0.247 0.233 0.174 0.158 0.146 0.102 0.092 0.057 0.082 0.074 0.044 0.053 0.047 25 30 0.610 0.478 0.552 0.412 0.184 0.116 0.059 0.742 0.672 0.131 0.067 0.034 0.099 0.046 0.075 0.032 0.026 0.008 0.033 0.453 0.307 0.372 0.228 0.305 0.170 0.208 0.141 0.097 0.054 0.030 40 0.022 0.015 0.011 50 0.608 0.550 0.087 0.021 0.010 0013 0.006 0.009 0.003 0.005 0.002 0.003 0.001 0.002 0.001 60 0.095 0.054 0.017 Period n 17% 24% 14% 15% 16% 1.000 0.862 18% 19% 20% 1.000 0.833 28% 1.000 0.781 32% 36% 40% 1.000 0.877 1.000 0.870 1.000 1.000 0.847 1.000 0.840 1.000 1.000 1.000 0.735 1.000 0.714 0.806 0.758 0.769 0.675 0.855 0.731 0.624 0.756 0.658 0.572 0.497 0.743 0.641 0.718 0.706 0.694 0.579 0.650 0.524 0.610 0.477 0574 0.41 0.398 0.510 0.364 0.435 0.592 0.519 0.609 0.516 0.437 0.593 0.499 0.419 0552 0.534 0.482 0.402 0.423 0.341 0.373 0.291 0.329 0.250 0292 0215 0.260 0.186 0.476 0.456 0.400 0.432 0.376 0410 0.354 0.456 0.390 0.333 0.158 0.116 0.370 0.314 0.266 0.225 0.191 0352 0.296 0.335 0.279 0.275 0.222 0227 0.178 0.189 0.143 0.133 0.095 0.068 0.048 0.351 0.308 0.327 0.284 0.305 0.263 0.285 0.243 0.208 0.178 0.152 0.130 0.249 0.209 0.233 0.194 0.179 0.144 0.139 0.108 0.085 0.063 0.108 0.085 0.066 0.082 0.062 0.047 0227 0.195 0.168 0.176 0.148 0.124 0.104 0.046 0.034 0.025 0.018 0.270 0.237 0.247 0.162 0.135 0.116 0.094 0.035 0.025 11 0.215 0.187 0.162 0.137 0.116 0.099 12 13 0.208 0.112 0.093 0.076 0.061 0.052 0.040 0.036 0.018 0.013 14 15 0.182 0.160 0.140 0.163 0.141 0.123 0.145 0.125 0.108 0.027 0.021 0.016 0.111 0.088 0.074 0.078 0.065 0.049 0.040 0.032 0.025 0.014 0.010 0.009 0.006 0.095 0.084 0.071 16 17 0.123 0.108 0.107 0.093 0.093 0.080 0.081 0.069 0.062 0.052 0.054 0.045 0.032 0.019 0.015 0.012 0.009 0.007 0.005 0.003 0.005 0.060 0.051 0.026 0.021 0.017 0.044 0.037 0.031 0.015 18 19 0.095 0.081 0.069 0.060 0.059 0.051 0.038 0.031 0.012 0.009 0.007 0.004 0.002 20 24 0.083 0.073 0.043 0.070 0.061 0.035 0.051 0.028 0.043 0.023 0.043 0.037 0.019 0.026 0.013 0.014 0.006 0.007 0.003 0.005 0.004 0.001 0.003 0.002 0.001 0.002 0.001 0.000 0.000 25 30 0.038 0.020 0.030 0.015 0.024 0.012 0.020 0.009 0.016 0.007 0.001 0.013 0.005 0.010 0.004 0.005 0.002 0.002 0.001 0.001 0.000 0.000 40 50 0.005 0.001 0.004 0.001 0.003 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.002 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 60 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 23 4507 0060123
Transcribed Image Text:TABLE II Present Value Interest Factor (PVIF) (S1 at i % per period for n periods): PVIF = (1+ PV = FV,(PVIF,a) Period, n 1% 1.000 3% 1.000 1.000 0.980 0.971 2% 4% 1.000 0.962 5% 1.000 6% 7% 8% 9% 10% 1.000 11% 1.000 12% 13% 1.000 0.943 1.000 0.935 1.000 0.926 0.857 0.794 1.000 0.917 1.000 0.893 0.797 0.712 0.636 1.000 0.885 0.990 0.980 0.971 0.952 0.909 0.901 0.961 0.943 0.942 0.915 0.907 0.864 0.812 0.731 0.659 0.593 0.783 0.693 0.613 0.543 0925 0.890 0.873 0.816 0.842 0.826 0.751 3 0.889 0.855 0.772 0.708 0.650 0.596 0.47 0.502 0.840 0.924 0.889 0.906 0.863 0.823 0.784 0.746 4 0.792 0.961 0.951 0.763 0.735 0.681 0.683 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.747 0.713 0.666 0.623 0.621 0.564 0.513 0567 0.507 0.452 0.888 0.838 0.871 0.813 0.853 0.789 0.837 0.766 0.705 0.665 0.627 0.592 0.58 0.527 0.497 0.469 0.442 0.417 0.535 0.482 0.434 0.480 0.425 0.942 0.630 0.933 0.923 0.914 O.583 0.540 0.711 0.677 0.582 0.544 0.467 0.404 0.376 033 0.295 0.261 0.645 10 11 0.508 0.475 0.500 0.463 0.460 0.422 0.424 0.386 0.350 0.391 0.352 0.317 0.361 0.322 0.905 0.820 0.744 0.804 0.722 0.614 0.896 0.887 0.585 0.557 0.429 0.397 0.388 0.287 0.257 0.229 0.205 0.183 0.788 0.701 0.773 0.681 0.286 0.258 0.232 0.209 0.231 0.204 0.181 12 13 0.625 0.601 0.444 0.356 0.319 0.879 0.530 0.758 0.661 0.743 0.642 0577 0.555 0534 0.415 0.388 0.362 0.368 0.340 0.326 0.299 0.290 0.263 0.239 0.505 0.481 14 0.870 15 0.315 0.292 0275 0.252 0.160 0.141 0.861 0.218 0.198 0.180 0.164 0.188 0.170 0.153 0.138 0.124 0.853 16 17 0.728 0.623 0.714 0.605 0.700 0.587 0.458 0.436 0.416 0.394 0.371 0.339 0.163 0.844 0513 0.494 0.317 0.270 0.250 0.231 0.212 0.296 0.276 0.258 0.197 0.146 0.130 0.116 0.104 0.066 0.125 0.111 0.098 0.087 18 19 0.836 0.350 0.331 0.828 0.820 0.686 0.570 0.673 0554 0.622 0.492 0.396 0.377 0310 0232 0.215 0.194 0.178 0.126 0.475 20 24 0.456 0.312 0.149 0.788 0.780 0.390 0.375 0.308 0.295 0.231 0.142 0.247 0.233 0.174 0.158 0.146 0.102 0.092 0.057 0.082 0.074 0.044 0.053 0.047 25 30 0.610 0.478 0.552 0.412 0.184 0.116 0.059 0.742 0.672 0.131 0.067 0.034 0.099 0.046 0.075 0.032 0.026 0.008 0.033 0.453 0.307 0.372 0.228 0.305 0.170 0.208 0.141 0.097 0.054 0.030 40 0.022 0.015 0.011 50 0.608 0.550 0.087 0.021 0.010 0013 0.006 0.009 0.003 0.005 0.002 0.003 0.001 0.002 0.001 60 0.095 0.054 0.017 Period n 17% 24% 14% 15% 16% 1.000 0.862 18% 19% 20% 1.000 0.833 28% 1.000 0.781 32% 36% 40% 1.000 0.877 1.000 0.870 1.000 1.000 0.847 1.000 0.840 1.000 1.000 1.000 0.735 1.000 0.714 0.806 0.758 0.769 0.675 0.855 0.731 0.624 0.756 0.658 0.572 0.497 0.743 0.641 0.718 0.706 0.694 0.579 0.650 0.524 0.610 0.477 0574 0.41 0.398 0.510 0.364 0.435 0.592 0.519 0.609 0.516 0.437 0.593 0.499 0.419 0552 0.534 0.482 0.402 0.423 0.341 0.373 0.291 0.329 0.250 0292 0215 0.260 0.186 0.476 0.456 0.400 0.432 0.376 0410 0.354 0.456 0.390 0.333 0.158 0.116 0.370 0.314 0.266 0.225 0.191 0352 0.296 0.335 0.279 0.275 0.222 0227 0.178 0.189 0.143 0.133 0.095 0.068 0.048 0.351 0.308 0.327 0.284 0.305 0.263 0.285 0.243 0.208 0.178 0.152 0.130 0.249 0.209 0.233 0.194 0.179 0.144 0.139 0.108 0.085 0.063 0.108 0.085 0.066 0.082 0.062 0.047 0227 0.195 0.168 0.176 0.148 0.124 0.104 0.046 0.034 0.025 0.018 0.270 0.237 0.247 0.162 0.135 0.116 0.094 0.035 0.025 11 0.215 0.187 0.162 0.137 0.116 0.099 12 13 0.208 0.112 0.093 0.076 0.061 0.052 0.040 0.036 0.018 0.013 14 15 0.182 0.160 0.140 0.163 0.141 0.123 0.145 0.125 0.108 0.027 0.021 0.016 0.111 0.088 0.074 0.078 0.065 0.049 0.040 0.032 0.025 0.014 0.010 0.009 0.006 0.095 0.084 0.071 16 17 0.123 0.108 0.107 0.093 0.093 0.080 0.081 0.069 0.062 0.052 0.054 0.045 0.032 0.019 0.015 0.012 0.009 0.007 0.005 0.003 0.005 0.060 0.051 0.026 0.021 0.017 0.044 0.037 0.031 0.015 18 19 0.095 0.081 0.069 0.060 0.059 0.051 0.038 0.031 0.012 0.009 0.007 0.004 0.002 20 24 0.083 0.073 0.043 0.070 0.061 0.035 0.051 0.028 0.043 0.023 0.043 0.037 0.019 0.026 0.013 0.014 0.006 0.007 0.003 0.005 0.004 0.001 0.003 0.002 0.001 0.002 0.001 0.000 0.000 25 30 0.038 0.020 0.030 0.015 0.024 0.012 0.020 0.009 0.016 0.007 0.001 0.013 0.005 0.010 0.004 0.005 0.002 0.002 0.001 0.001 0.000 0.000 40 50 0.005 0.001 0.004 0.001 0.003 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.002 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 60 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 23 4507 0060123
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Stock Valuation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Corporate Fin Focused Approach
Corporate Fin Focused Approach
Finance
ISBN:
9781285660516
Author:
EHRHARDT
Publisher:
Cengage
SEE MORE TEXTBOOKS