Janicex Co. is growing quickly. Dividends are expected to grow at a rate of 20 p

Question

Janicex Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 8 percent thereafter. If the required return is 11 percent and the company just paid a dividend of $1.45, what is the current share price? (Round your answer to 2 decimal places. (e.g., 32.16)) Current share price $ Rabie, Inc., has an issue of preferred stock outstanding that pays a $5.10 dividend every year, in perpetuity. Required: If this issue currently sells for $80.15 per share, what is the required return? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Required return % Anton, Inc., just paid a dividend of $2.50 per share on its stock. The dividends are expected to grow at a constant rate of 5.25 percent per year, indefinitely. Assume investors require a return of 9 percent on this stock. Requirement 1: What is the current price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Current price $ Requirement 2: What will the price be in six years and in thirteen years? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Six years $ Thirteen years $

Explanation / Answer

1) Current share price = 1.45*1.20/1.11 + 1.45*1.20^2/1.11^2  + 1.45*1.20^3/1.11^3  + (1.45*1.20^3*1.08/(11%-8%))/1.11^3

Current share price = $ 71.05

2) Required Return = 5.10/80.15

Required Return = 6.36%

3) Current Price = 2.50*1.0525/(9%-5.25%)

Current Price = $ 70.17

4) a) Price in 6 year = 2.50*1.0525^7/(9%-5.25%)

Price in 6 year = $ 95.38

b)

Price in 13 year = 2.50*1.0525^14/(9%-5.25%)

Price in 13 year = $ 136.46

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