Firm K will pay a common stock dividend of $1.2 per share one year from now. The

Question

Firm K will pay a common stock dividend of $1.2 per share one year from now. They intend to grow the dividend by 4% each year forever. If the stock's required return is 6.8%, what is the price per share today? Round your answer to the nearest cent.

Firm K paid a common stock dividend of $3.13 per share this morning. They intend to grow the dividend by 1% each year forever. If the stock's required return is 6.1%, what is the price per share today? Round your answer to the nearest cent.

The next dividend payment by Firm C will be $1.84 per share. The dividends are anticipated to maintain a 1.5 percent growth rate, forever. If the stock currently sells for $49.55 per share, what is the required return? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).

Firm S stock currently sells for $21.33 per share. The market requires a 12 percent return on the firm's stock, and the dividend to be paid one year from now is $1.86. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).

Firm T stock currently sells for $51.47 per share. The market requires a 11 percent return on the firm's stock, and the most recent annual dividend per share was $2.02. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).

Explanation / Answer

Firm K will pay a common stock dividend of $1.2 per share one year from now. They intend to grow the dividend by 4% each year forever. If the stock's required return is 6.8%, what is the price per share today? Round your answer to the nearest cent.

Solution- price per share today= D1/(r-g) = 1.2/(6.8%-4%) =$42.86

Firm K paid a common stock dividend of $3.13 per share this morning. They intend to grow the dividend by 1% each year forever. If the stock's required return is 6.1%, what is the price per share today? Round your answer to the nearest cent.

Solution : price per share today = D1/(r-g) = 3.13*(1+1%)/(6.1%-1%) =$61.99

The next dividend payment by Firm C will be $1.84 per share. The dividends are anticipated to maintain a 1.5 percent growth rate, forever. If the stock currently sells for $49.55 per share, what is the required return? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).

Solution-

P= D1/(r-g)

49.55 = 1.84/(r-1.5%)

required return, r= 5.2134%

Firm S stock currently sells for $21.33 per share. The market requires a 12 percent return on the firm's stock, and the dividend to be paid one year from now is $1.86. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).

Solution: P= D1/(r-g)

21.33 = 1.86/(12%-g)

growth rate. g= 3.2799%

Firm T stock currently sells for $51.47 per share. The market requires a 11 percent return on the firm's stock, and the most recent annual dividend per share was $2.02. The company maintains a constant growth rate in dividends. What is this growth rate? Express your answer as a percentage and round to four decimal places (e.g., 15.83% = 0.1583).

Solution: P= D1/(r-g)

51.47 = 2.02*(1+g)/(11%-g)

5.6617 - 51.47g = 2.02 + 2.02g

g= 6.8082%

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