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Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders.
a. Suppose a company currently pays an annual dividend of $2.80 on its common stock in a single annual installment, and management plans on raising this dividend by 6 percent per year indefinitely. If the required return on this stock is 12 percent, what is the current share price?
b. Now suppose the company in (a) actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $.70 per share, as it has for the previous three quarters. What is your value for the current share price now? (Hint: Find the equivalent annual end-of-year dividend for each year.)
With the WACC, we can discount our estimate of future cash flow, which should represent all cash flow (free cash flow, or distributable cash flow). As usual, we would need to apply a terminal valuation at some point.
You deposit $400 each month into an account earning 8% interest compounded monthly.
your bank is offering 5.5 fixed-rate mortgage requiring a down payment equal to 10 of the homes purchase price. the
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What amount is remaining on their mortgage on December 31st, 2013?
The dividends are then expected to grow at a 6% rate forever. The required return (rs) is 12%. ?What is the best estimate of the current stock price?
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Going out cap rate is 7.5%. Cost of sales is usually 3%. Your investment horizon is 5 years. What is the estimated hotel value today?
What is your monthly payment? What is the total amount of payments made over the life of the loan? How many years will it take to pay off the loan if you pay an extra $100 per month?
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