If you require a return of 9 percent on your investment, how much will you pay for the company’s stock today? Q.2 Raffalovich, Inc., is expected to maintain a constant 5.45 percent growth rate in its dividends, indefinitely. |
| Required: | If the company has a dividend yield of 3.95 percent, what is the required return on the company’s stock? Q.3 | You’ve collected the following information from your favorite financial website. | | |
52-Week Price
| Stock (Div) | Div
Yld % | PE
Ratio | Close
Price | Net
Chg | | Hi | Lo | | 79.3 | 10.62 | Palm Coal 0.55 | 3.5 | 6 | 15.80 | –0.24 | | 55.81 | 33.42 | Lake Lead Grp 1.54 | 3.8 | 10 | 40.43 | –0.01 | | 130.93 | 69.50 | SIR 2.00 | 2.2 | 10 | 88.97 | 3.07 | | 50.24 | 13.95 | DR Dime 0.80 | 5.2 | 6 | 15.43 | –0.26 | | 35.00 | 20.74 | Candy Galore 0.32 | 1.5 | 28 | ?? | 0.18 |
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| | According to your research, the growth rate in dividends for Palm Coal for the previous 10 years has been 4.25 percent. |
| | | Required: | If investors feel this growth rate will continue, what is the required return for Palm Coal stock? Q.4 Antiques ‘R’ Us is a mature manufacturing firm. The company just paid a dividend of $11.10, but management expects to reduce the payout by 5 percent per year, indefinitely. |
| | | Required: | If you require a return of 11 percent on this stock, what will you pay for a share today? |
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jack7222
11 years ago
8
stock_valuation_revised_copy.docx
