Calculate the next dividend to be paid and back-out

Assignment Help Finance Basics

Reference no: EM13273340

The Down and Out Co. just issued a dividend of $2.71 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $30 a share, what is the company's cost of equity? (Do not round your intermediate calculations.) Hint: In chapter 8 we calculated the stock price as the present value of future dividends. This is a constant growth stock, and you know the price, the last dividend paid, and the growth rate in the dividend. Simply calculate the next dividend to be paid and back-out the required return (discount rate) on the stock. A) 9.78% B)14.8% C)15.58% D)16.35% E)15.03%

Reference no: EM13273340

Questions Cloud

Determine he speed of the scattered electron : In a Compton collision, if the wavelength of the photon is 1.00 pm and its deflected angle is 60.0°

What was the real risk premium on equities : The market portfolio of common stocks earned 14.7% in one year. Treasury bills earned 5.7%. What was the real risk premium on equities?

Define what is the concentration of hcl : A 0.221 g sample of sodium carbonate was titrated to a pale yellow endpoint with HCl. What is the concentration of HCl

Calculate the period of oscillation of the system : A very light rigid rod of length 0.600 m extends straight out from one end of a metre long rod of mass M. Determine the period of oscillation of the system

Calculate the next dividend to be paid and back-out : This is a constant growth stock, and you know the price, the last dividend paid, and the growth rate in the dividend. Simply calculate the next dividend to be paid and back-out the required return (discount rate) on the stock. A) 9.78% B)14.8% C)1..

What would be the current value of these collection payments : what would be the current value of these collection payments: a) at a 4% rate of return? b) at a 14% rate of return?

The tripeptide alanyllysylaspartate contains four ionizable : The tripeptide alanyllysylaspartate contains four ionizable groups with pKas of 2.0, 3.9, 9.9, and 10.5. Calculate the pI for this molecule.

How much deposit must you make today assuming interest : John Deposits $500 in a savings account at 5% interest for 5 years. At the end of the period how much will he have if no withdrawals are made.

Determine the thermal efficiency : A heat engine extracts 50.0kJ of heat from the hot reservoir each cycle and exhausts 35.0kJ of heat. What is the thermal efficiency

User Account

All Pages