FCFE1 18B. FCFF Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%. The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%. What is the value of this stock if there are 500,000 outstanding shares? 3 4 5 $1.0000 g Yr 2-3 years 25.00% g Yr 4 year 10.00% g Year 5+ 3.00% k 12.50% PVFCFE # of shares 500,000 Stock Price Kohelin - 1.0

FCFE1 18B. FCFF Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%. The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%. What is the value of this stock if there are 500,000 outstanding shares? 3 4 5 $1.0000 g Yr 2-3 years 25.00% g Yr 4 year 10.00% g Year 5+ 3.00% k 12.50% PVFCFE # of shares 500,000 Stock Price Kohelin - 1.0

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12% rate of return. Although the dividend has been growing at a rate of 30% per year in recent years, this growth rate is expected to last only for another 2 years (g0,1 = g1,2 = 30%). After Year 2, the growth rate will stabilize at gL = 7%. What is CCC’s stock worth today? What is the expected stock price at Year 1? What is the Year 1 expected (1) dividend yield, (2) capital gains yield, and (3) total return? What is its expected dividend yield for the second year? The expected capital gains yield? The expected total return?
1. An analyst estimates that a stock will pay a $1 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 14%, what is the value of the stock? A. $34.60. B. $35.52. C. $35.96.
1. XYZ Corporation is currently paying a dividend of $1.5 per share and is expected to increase this dividend by 10% per year for the next two year. After this, dividends are expected to grow at a stable rate of 4% annually. If the required rate of return on the stock is 8%, what is the current value of a share? A. $40.00 B. $42.25 C. $47.19 D. $43.62 2. JW Corporation is expected to pay a dividend of $1.80 per share next year. After that, dividends are expected to grow by 3% annually indefinitely. The current stock price is $30.00. If your required rate of return is 10%, should you purchase the stock today? Why or why not? A. No; The stock has a present value of $31.50 per share. B. Yes; The stock has a present value of $31.50 per share. C. No; The stock has a present value of $25.71 per share. D. Yes; The stock has a present value of $25.71 per share. E. No; The stock has a present value of $36.00 per share.
Suppose DO = $2.00. rs= 9%, What if g = 30% the first year, 20% the second year, and 10% the third year, and return to its long-run constant growth rate of 4%, Calculate the value of the stock today? O $62.7846 O $55.5021 O $60.3211 O $65.7223 O $72.3487
An ordinary share currently pays a dividend of R2 for the year. Expected dividends growth is 20% for the next three years and then growth is expected to revert to 7% thereafter for an indefinite amount of time. The appropriate required rate of return is 15%. What is this ordinary share’s value?1. R33.892. R34.563. R36.934. R37.23
NoRagrets, Inc is expected to pay a dividend in year 1 of $2 and a dividend in year 2 of $2.40. After year 2, dividends are expected to grow at the rate of 6% per year. An appropriate required return for the stock is 9%. The stock should be worth today. Select one: O a. $73.37 O b. $79.63 O c. $67.32 O d. $73.21
Suppose Barclay Corp is expected to pay a dividend of $2.50 at the end of the year. f the company and its dividends are growing at a relatively constant rate of 3.5% and Investors required return on the stock is 10.2%, what is the value of the stock? O$37.31 O $24.47 O$25.37 O $24.51 O$38.62 Page 13 of 30 Previous Page Next Page 0gf30.guestions.saved.
Solve for the stock price, P0, using the following information: D1: $3.31 D2: $3.94 D3: $4.76 D4: $5.17 After year 4, dividends will grow at a constant 4% per year. The required return on the stock, rS, is 12% per year.
P10-5 (similar to) Question Help ▼ (Common stock valuation) The common stock of NCP paid $1.25 in dividends last year. Dividends are expected to grow at an annual rate of 5.20 percent for an indefinite number of years. me: ne: a. If your required rate of return is 7.60 percent, what is the value of the stock for you? b. Should you make the investment? ust Worked a. If your required rate of return is 7.60 percent, the value of the stock for you is $. (Round to the nearest cent.) urrent Scor ttempts: X Question Jesti / Question jesti / Question OK This course (Busin Terms of Use Priv Enter your answer in the answer box and then click Check Answer. Check Answer Clear All 1 part remaining 99+
CanPro Co. is expecting that its dividend for this coming year will be $1.2 a share and that all future dividends are expected to increase by 3 percent annually. What is the required return of this stock if the current market price of the stock is $17? a. 11.00% b. 9.67% c. 11.74% d. 10.06%
Target Corporation (TGT) just paid a $3.14 dividend, and it is expected to grow at 6.25% for the next 3 years. After 3 years the dividend is expected to grow at the rate of 2.95% indefinitely. If the required return is 7.12%, what is the stock’s value today? A. $61.67 B. $70.95 C. $84.97 D. $98.04
Solve for the stock price, P0, using the following information: D1: $3.31 D2: $3.94 D3: $4.76 D4: $5.17 After year 4, dividends will grow at a constant 4% per year. The required return on the stock, rS, is 12% per year. Enter your answer in dollars and cents, rounded to the nearest cent.