Problem . Valuation of equity X Company paid dividends of 2.12 in 2022. The dividends are expected to grow at 5% per year in the long term and the company has a cost of equity of 9.40%. What is the value per equity share?
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Problem . Valuation of equity
X Company paid dividends of 2.12 in 2022. The dividends are expected to grow at 5%
per year in the long term and the company has a
Step by step
Solved in 2 steps
- If the last dividend paid by Chemical Brothers Inc. was $1.25 and analysts expect these payments to increase 4% per year, what will the stock price be next year if the required return is 15%? Select one: O a. $12.29 O b. $11.82 O c. $31.25 O d. $12.78 O e. $23.11Company XYZ's dividend of $1.50 is expected be 5% higher next year, and after that the dividend is expected to grow at a constant 1.4% onto perpetuity. Assuming a cost of equity of 12%, using the Gordon growth model, what should the stock be worth today? Possible answers: A)$18.9/share B) $14.2/share C) $14.9/share D) $19.7/shareCompany XYZ is investors expect earnings and dividends to grow at a constant rate of 8% in the future dividend is expected to be paid at the rate of $3.40 per share next year, and its stock currently sells at a price of $60 per share. Calculate the cost of Common equity?
- Given a stock price of P39.77 and an expected return to shareholders of 12.4%, what is the likely growth rate if the annual dividend next year is expected to be P3.50? A. 0.0% B. 3.6% C. 8.4% D. 12.4%COST OF COMMON QUITY The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 6% per year. Callahan’s common stock currently sells for $22.00 per share, its last dividend was $2.00, and it will pay a $2.12 dividend at the end of the current year. 1. Using the CDF approach, what is its cost of common equity? 2. What is youe estimate of Callahan's cost of common equitySuppose that X company expected to pay$1.05 dividends for the coming year and currently the company paid a dividend of $1, What is the value of the stock? If the required return is 10%. And the growth rate is expected to continue.
- For Company ABC, if stock price P0 = $30; dividend paid at the end of period 1 D1 = $3.00; growth rate g = 5%; What’s the required rate of return for equity holder rs = ? If the flotation cost F = 10%; What’s the required rate of return for equity holder rs = ?A company is expected to pay out 40% of its expected earnings per share of €0.5 next year as dividends. The earnings are expected to grow 2% per year in perpetuity and the cost of equity is 7%. Supposing that the company is a stable growth dividend paying, calculate the expected PE ratio. P/E=Payout ratio*(1+g)/(r-g) A. 4 B. 8 C. 10 D. 20 E. 25You are evaluating the stock of XYZ Corp. Suppose that the required rate of return for the firm is 20%. Suppose future dividends are expected to grow at 10% per year. The current stock price of the firm is $55. What is the expected dividend per share next year (D1)? a. $4.5 b. $4.0 c. $5.0 d. $5.5
- Estimate the cost of equity if the share price is $50, the nextt annual dividend is expected to be $1, and the expected growth rate for dividends is 5% per year.Using the Dividend Growth Approach, suppose that your company is expected to pay a dividend of $1.25 per share next year. There has been a steady growth in dividends of 5.1% per year and the market expects that to continue. The current price is $29. What is the cost of equity?Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $2.50 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, PO, is $20.00. If it needs to issue new common stock, the firm will encounter a 5.3% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places.