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- In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.20. The dividends are expected to grow at 10 percent over the next five years. In five years, the estimated payout ratio is 25 percent and the benchmark PE ratio is 22. a. What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the stock price today assuming a required return of 10 percent on this stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price in 5 years b. Stock price today IIn practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.26. The dividends are expected to grow at 11 percent over the next five years. In five years, the estimated payout ratio will be 45 percent and a benchmark PE will be 21. The required return is 13 percent. What is the stock price today?In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.25. The dividends are expected to grow at 11 percent over the next five years. In five years, the estimated payout ratio is 30 percent and the benchmark PE ratio is 23. What is the target stock price in five years? What is the stock price today assuming a required return of 10.5 percent on this stock?
- in practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.40. The dividends are expected to grow at 14 percent over the next five years. In five years, the estimated payout ratio is 40 percent and the benchmark PE ratio is 26. a. What is the target stock price in five years? b. What is the stock price today assuming a required return of 12 percent on this stock? Only type answer and give fastIn practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.95. The dividends are expected to grow at 12 percent over the next five years. In five years, the estimated payout ratio is 40 percent and the benchmark PE ratio is 37. a. What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the stock price today assuming a required return of 13.5 percent on this stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)