Tofrandi Naturals just paid a dividend of $2.84. You expect a growth rate of 5%
ID: 2710034 • Letter: T
Question
Tofrandi Naturals just paid a dividend of $2.84. You expect a growth rate of 5% for 3 years. After that, they are expected to grow at 11%. Your required return to hold this stock is 21%. How much is this stock worth?
Compute the present value of an ordinary annuity receiving 7 annual payments of $58 at an interest rate of: 6%
Thora is considering buying a BMW bond for $674.205. This bond has a maturity value of $757, maturing in 3 years, with comparable interest rates of 12%, and coupon payments of $43. What should she pay?
Explanation / Answer
1.
2.Compute the PV of given opportunity in the following manner.
Present value= Annual payment *[1-(1+rate)^-years/rate]
=58*[1-(1+6%)^-7/6%
=$323.78
year dividend Expected grwoth rate rate @21% stock price 0 2.84 1 1 2.84 0.142 1.21 0.17182 2 2.84 0.284 1.21 0.34364 3 2.84 0.426 1.21 0.51546 4 2.84 0.7384 1.21 0.893464Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.