Question 1

Develop a current stock value for a firm that is expected to have extraordinary growth of 25% for four years, after which it will face more competition and slip into a constant growth rate of 5%.Its required return is 14% and next year's dividend is expected to be $5.00

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Question 2

For a firm that expects earnings next year of $10.00 per share, has a plowback ratio of 35%, a return on equity of 20%, and a required return of 15%, show the current stock value and next year's expected stock value, assuming that growth is to be constant.

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Question 3

Lincoln and Donovan's will pay a dividend of $5 per share in year 1.It sells at $60 a share, and firms in the same industry provide an expected rate of return of 14 percent.What must be the expected growth rate of the company's dividend?

Accepted Answer

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Question 4

How does competition among investors lead to efficient markets?

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Question 5

A stock offers an expected dividend of $3.50, has a required return of 14%, and has historically exhibited a growth rate of 6%.Its current price is $35.00 and shows no tendency to change.How can you explain this price based on the constant growth dividend discount model?

Accepted Answer

The answer of A stock offers an expected dividend of...

Quiz 7: Valuing Stocks

Develop a current stock value for a firm that is expected to have extraordinary growth of 25% for four years, after which it will face more competition and slip into a constant growth rate of 5%.Its required return is 14% and next year's dividend is expected to be $5.00

For a firm that expects earnings next year of $10.00 per share, has a plowback ratio of 35%, a return on equity of 20%, and a required return of 15%, show the current stock value and next year's expected stock value, assuming that growth is to be constant.

Lincoln and Donovan's will pay a dividend of $5 per share in year 1.It sells at $60 a share, and firms in the same industry provide an expected rate of return of 14 percent.What must be the expected growth rate of the company's dividend?

How does competition among investors lead to efficient markets?

A stock offers an expected dividend of $3.50, has a required return of 14%, and has historically exhibited a growth rate of 6%.Its current price is $35.00 and shows no tendency to change.How can you explain this price based on the constant growth dividend discount model?