MyLab Finance with Pearson eText -- Access Card -- for Corporate Finance (Myfinancelab)
4th Edition
ISBN: 9780134099170
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 7P
a.
Summary Introduction
To determine: The expected growth rate of DC’s dividend
Introduction: Dividend discounted model is a method of calculating the company’s stock value; the expected value is the sum of the future dividend payment that is discounted back to their present value. In other words, the stock value is based on the sum of the present value of the future dividend.
Growth rate is the expected rate in which the future dividend will grow at an expected rate.
b.
Summary Introduction
To determine: The expected growth rate of DC’s share price
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Jl co. Stock currently sells for $64 per share and the required return is 12 percent. The total return is evenly divided between the capital gains yield and the dividend yield. What is the current dividend per share if it's the company"s policy to always maintain a constant growth rate in its dividends?
Dorpac Corporation has a dividend yield of 1.9%. Its equity cost of capital is 7.1%, and its dividends are expected to grow at a canstant rate. a. What i the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac’s share price? a. What s the expected growth rate of Dorpac's dividends? The growth rate wil be [ [%. (Round to one decimal place.) b. What is the expected growth rate of Dorpac’s share price? What is the expected growth rate of Dorpac’s share price? (Select the best choice below) O A. With constant dividend growth, the share price is expected to grow at rate g =5.2% O B. With constant dividend growth, the share price is expected to grow at rate g=7.1% O C. With constant dividend growth, the share price is expected to grow at rate g =5.2% ~1.9% = 3.3%. O D. With constant dividend growth, the share price is expected to grow at rate g =1.9%
All Metals, Inc. has a current stock price of $35 share, is expected to pay a dividend of $1.20 in one year, and its expected price right after paying that dividend is $33.
What is Rearden's expected dividend yield?What is Rearden's Expected capital gains yield?What is Rearden's equity cost of capital?
Chapter 9 Solutions
MyLab Finance with Pearson eText -- Access Card -- for Corporate Finance (Myfinancelab)
Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CCCh. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CCCh. 9.3 - Prob. 3CCCh. 9.4 - Prob. 1CCCh. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.
Ch. 9.5 - Prob. 2CCCh. 9 - Assume Evco, Inc., has a current price of 50 and...Ch. 9 - Anle corporation has a current price of 20, is...Ch. 9 - Suppose Acap Corporation will pay a dividend of...Ch. 9 - Prob. 4PCh. 9 - NoGrowth Corporation currently pays a dividend of...Ch. 9 - Summit Systems will pay a dividend of 1.50 this...Ch. 9 - Prob. 7PCh. 9 - Canadian-based mining company EI Dorado Gold (EGO)...Ch. 9 - In 2006 and 2007, Kenneth Cole Productions (KCP)...Ch. 9 - DFB, Inc., expects earnings at the end of this...Ch. 9 - Cooperton Mining just announced it will cut its...Ch. 9 - Procter and Gamble (PG) paid an annual dividend of...Ch. 9 - Colgate-Palmolive Company has just paid an annual...Ch. 9 - Prob. 14PCh. 9 - Halliford Corporation expects to have earnings...Ch. 9 - Prob. 16PCh. 9 - Maynard Steel plans to pay a dividend of 3 this...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Suppose that In January 2006, Kenneth Cole...Ch. 9 - In addition to footwear, Kenneth Cole Productions...Ch. 9 - You read in the paper that Summit Systems from...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33P
Knowledge Booster
Similar questions
- Anle's Corporation has a current price of $12, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $16. What is Anle's expected dividend yield? What is Anle's expected capital gain rate? What is Anle's equity cost of capital? a. What is Anle's expected dividend yield? Anle's expected dividend yield is b. What is Anle's expected capital gain rate? Anle's expected capital gain rate is c. What is Anle's equity cost of capital? Anle's equity cost of capital is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)arrow_forwardAnle Corporation has a current price of $13, is expected to pay a dividend of $2 in one year, and its expected price right after paying that dividend is $22. What is Anle's expected dividend yield? (Round to two decimalplaces.) What is Anle's expected capital gain rate? (Round to two decimalplaces.) What is Anle's equity cost of capital? (Round to two decimalplaces.)arrow_forwardKeenan Co. is expected to maintain a constant 5.2 percentgrowth rate in its dividends indefi nitely. If the company has a dividend yield of6.3 percent, what is the required return on the company’s stock?arrow_forward
- Choi Tech stock currently sells for $64 per share and the required return is 12 percent. The total return is evenly divided between the capital gains yield and the dividend yield. What is the current dividend per share if it's the company's policy to always maintain a constant growth rate in its dividends? What are the inputs to solve this on a BA II plus financial calculator?arrow_forwardDorpac Corporation has a dividend yield of 1.44%. Dorpac's equity cost of capital is 7.42%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?arrow_forwardWaterworks has a dividend yield of 5.87 percent. If its capital gain yield is expected to be 4.88 percent, what must be the expected return on the company's stock?arrow_forward
- Dorpac Corporation has a dividend yield of 2.4 %. Dorpac's equity cost of capital is 8.4 %,and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?arrow_forwardKrell Industries has a share price of $22.32 today. If Krell is expected to pay a dividend of $1.07 this year and its stock price is expected to grow to $23.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? a) The dividend yield is ______%. (Round to one decimal place.) b) Capital Gain Rate_____ c) The total return ____%arrow_forwardDorpac Corporation has a dividend yield of 2.3%. Dorpac's equity cost of capital is 8.2%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT