EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Concept explainers

Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that…
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Stock Valuation
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Chapter 7, Problem 23P
Summary Introduction

To determine: Current value of stock.

Given information:

Expected rate of growth: 20% (for upcoming 7 years)

Expected increase in the value of stocks: $40

Required rate of return on stocks: 20%

Calculation of current value of stock:

P0=​FVn(PVIFi,n)

FV refers to future value of investment,

i is interest rate,

n is number of periods,

PVIF refers to a used for calculation.

P0=$1PVIF.2,1+$1.20PVIF.2,2+$1.44PVIF.2,3+$1.728(PVIF.2,4+$2.074 + $40PVIF.2,5=$1.833+$1.2.694+$1.44.579+$1.728.482 +$2.074 + $40.402=$20.25

Therefore, the company stock value will be $20.25

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Chapter 7 Solutions

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Ch. 7 - Prob. 1QTDCh. 7 - Prob. 2QTDCh. 7 - Prob. 3QTDCh. 7 - Prob. 4QTDCh. 7 - Prob. 5QTDCh. 7 - Prob. 6QTDCh. 7 - Prob. 7QTDCh. 7 - Prob. 8QTDCh. 7 - Prob. 9QTDCh. 7 - Prob. 10QTD
Ch. 7 - Prob. 11QTDCh. 7 - Prob. 12QTDCh. 7 - Prob. 13QTDCh. 7 - Prob. 14QTDCh. 7 - Prob. 15QTDCh. 7 - Prob. 16QTDCh. 7 - Prob. 17QTDCh. 7 - Prob. 18QTDCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29P
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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY