1. Sanford common stock is expected to pay $1.85 in dividends next year, and the

Question

1. Sanford common stock is expected to pay $1.85 in dividends next year, and the market price is projected to be $42.50 per share by year-end. If investors require a rate of return of 11 percent, what is the current value of the stock? The current value of the stock is $__________(Round to the nearest cent.)
2.Schlumberger is selling for $72.78 per share and paid a dividend of $1.09 last year. The dividend is expected to grow at 5 percent indefinitely. What is the stock's expected rate of return? The stock's expected rate of return is ______ (Round to two decimal places.)
3.Zust preferred stock is selling for $39.12 per share and pays $2.10 in dividends. What is your expected rate of return if you purchase the security at the market price?Your expected rate of return is ___________ (Round to two decimal places) 1. Sanford common stock is expected to pay $1.85 in dividends next year, and the market price is projected to be $42.50 per share by year-end. If investors require a rate of return of 11 percent, what is the current value of the stock? The current value of the stock is $__________(Round to the nearest cent.)
2.Schlumberger is selling for $72.78 per share and paid a dividend of $1.09 last year. The dividend is expected to grow at 5 percent indefinitely. What is the stock's expected rate of return? The stock's expected rate of return is ______ (Round to two decimal places.)
3.Zust preferred stock is selling for $39.12 per share and pays $2.10 in dividends. What is your expected rate of return if you purchase the security at the market price?Your expected rate of return is ___________ (Round to two decimal places) 1. Sanford common stock is expected to pay $1.85 in dividends next year, and the market price is projected to be $42.50 per share by year-end. If investors require a rate of return of 11 percent, what is the current value of the stock? The current value of the stock is $__________(Round to the nearest cent.)
2.Schlumberger is selling for $72.78 per share and paid a dividend of $1.09 last year. The dividend is expected to grow at 5 percent indefinitely. What is the stock's expected rate of return? The stock's expected rate of return is ______ (Round to two decimal places.)
3.Zust preferred stock is selling for $39.12 per share and pays $2.10 in dividends. What is your expected rate of return if you purchase the security at the market price?Your expected rate of return is ___________ (Round to two decimal places)

Explanation / Answer

Note:

All three given questions are independent & separate. So as per rule I am answering first question.

1.

Formula of current value of stock is as follow;

Current value of stock = (Dividend / Required rate of return)

Dividend = $1.85

Required rate of return = 11%

Now let’s put the values in the formula;

$1.85 / .11 = $16.82

Thus current value of stock = $16.82

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