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# ABC’s last dividend paid was \$1, its required return is 12.6% Answer

ABC’s last dividend paid was \$1, its required return is 12.6% Answer

ABC’s last dividend paid was \$1, its required return is 12.6% Answer

Question 1

ABC’s last dividend paid was \$1, its required return is 12.6%, its growth rate is 7.8%, and its growth rate is expected to be constant in the future. What is Sorenson’s expected stock price in 7 years, i.e., what is P7?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”
Question 2

A stock’s next dividend is expected to be \$0.6. The required rate of return on stock is 13.2%, and the expected constant growth rate is 6%. What is the stock’s current price?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 3

ABC Enterprises’ stock is currently selling for \$94.8 per share. The dividend is projected to increase at a constant rate of 6% per year. The required rate of return on the stock is 12%. What is the stock’s expected price 5 years from today (i.e. solve for P5)?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 4

The common stock of Wetmore Industries is valued at \$52.6 a share. The company increases their dividend by 4.9 percent annually and expects their next dividend to be \$1.5. What is the required rate of return on this stock?

Question 5

If last dividend = \$6, g = 6.4%, and P0 = \$69.3, what is the stock’s expected total return for the coming year?

Question 6

ABC Enterprises’ stock is expected to pay a dividend of \$1.6 per share. The dividend is projected to increase at a constant rate of 6.7% per year. The required rate of return on the stock is 12.5%. What is the stock’s expected price 3 years from today (i.e. solve for P3)?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 7

ABC just paid a dividend of D0 = \$1.4. Analysts expect the company’s dividend to grow by 30% this year, by 27% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 14%. What is the best estimate of the stock’s current market value?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 8

If D1 = \$3.4, g (which is constant) = 2.1%, and P0 = \$67, what is the stock’s expected total return for the coming year?

Question 9

ABC Company’s last dividend was \$4. The dividend growth rate is expected to be constant at 17% for 2 years, after which dividends are expected to grow at a rate of 7% forever. The firm’s required return (rs) is 16%. What is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 10

A stock just paid a dividend of \$0.8. The required rate of return is 10.6%, and the constant growth rate is 6.2%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 11

ABC Inc., is expected to pay an annual dividend of \$1.4 per share next year. The required return is 12.8 percent and the growth rate is 3.9 percent. What is the expected value of this stock five years from now?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”
Question 12

A stock is expected to pay a dividend of \$1.8 at the end of the year. The required rate of return is rs = 11.7%, and the expected constant growth rate is g = 6.9%. What is the stock’s current price?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box.

Question 13
A stock just paid a dividend of D0 = \$1.8. The required rate of return is rs = 14.2%, and the constant growth rate is g = 6.5%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

Question 14
ABC’s stock has a required rate of return of 13.7%, and it sells for \$53 per share. The dividend is expected to grow at a constant rate of 6.9% per year. What is the expected year-end dividend, D1?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”
Question 15
The common stock of Connor, Inc., is selling for \$97 a share and has a dividend yield of 4.4 percent. What is the dividend amount?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”

Question 16
ABC’s last dividend was \$2.1. The dividend growth rate is expected to be constant at 23% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm’s required return (rs) is 17%, what is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”

Question 17
ABC is expected to pay a dividend of \$2.7 per share at the end of the year. The stock sells for \$116 per share, and its required rate of return is 14.2%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”

Question 18
If D1 = \$3.18, g (which is constant) = 2%, and P0 = \$89.61, what is the stock’s expected dividend yield for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.”

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