STEP BY STEP SOLUTION FOR THIS PLEASE LIKE OTHER PROBLEMS THAN YOU Stock Valuati
ID: 3143338 • Letter: S
Question
STEP BY STEP SOLUTION FOR THIS PLEASE LIKE OTHER PROBLEMS THAN YOU
Stock Valuation. Suppose you know that a for $67 per share and the required return on the stock is 11.5 percent. You also know that the total return on the stock is evenly divide between capital gains yield and dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? Stock Valuation. Burkhardt Corp. pays a constant $13.50 dividend on its stock. The company will maintain this dividend for the next 9 years and will then cease paying dividends forever. If the required return on this stock is 9.2 percent, what is the current share price? Valuing Preferred Stock. Smiling Elephant, Inc., has an issue of preferred stock is stock outstanding that pays a $3.45 dividend every year, in perpetuity. If this issue currently sells for $77.32 per share, what is the required return? Voting Rights. After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. If the company has 450, 000 shares outstanding and the stock currently sells for $34, how much will it cost you to buy a seat if the company uses straight voting? Assume that the company uses cumulative voting and there are 4 seats in the current election: how much will it cost you to buy a seat now?Explanation / Answer
Given : D = $13.50 ; t = 9 years ; R = 9.2% = 0.092
Solution :
The current share price( P0) can be given as :
P0= D × [1-1/(1+R)t]/R
= 13.50 × [1-1/(1+0.092)9]/0.092
= $ 80.282
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