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Thomas Brothers is expected to pay $0.50 per share dividend at the end of
the year (that is, D1 = $0.50). The dividend is expected to grow at a constant rate
of 7% a year. The required rate of return on the stock, Rs, is 15%. What is the
stocks value per share?
D1 = $0.50; g = 7%; rs = 15%; P(hat) 0 = ?
9.
Harrison Clothiers stock currently sells for $20 a share. It just paid a
dividend of $1.00 a share (that is, Do = $1.00). The dividend is expected to grow
at a constant rate of 6% a year. What stock price is expected 1 year from now?
What is the required rate of return?
12.
14.
Fee Founders has perpetual preferred stock outstanding that sells for $60
per share and pays a dividend of $5 at the end of each year. What is the required
rate of return?