Ask Experts Questions for FREE Help !
Ask
    Complexity07's Avatar
    Complexity07 Posts: 15, Reputation: 2
    New Member
    		  
    #1

    Feb 3, 2008, 11:35 PM
    Common stock value based on determining growth rate
    I'm not sure if I answered this problem correctly, could someone check it for me? Thanks

    A firm pays a $4.90 dividend at the end of year one (D1), has a stock price of $70, and a constant growth rate (g) of 6 percent. Compute the required rate of return.

    Po=D1/Ke-g 4.90/70 -.06 = 4.90/69.94 = 0.07006
    MaggieMouse's Avatar
    MaggieMouse Posts: 226, Reputation: 8
    Full Member
    		  
    #2

    Feb 5, 2008, 08:39 PM
    After the 6% price increase, the stock was originally priced at $66 at beginning of year.
    $70/1.06=about $66.

    paid $66 and get $4.90, return is 7.4%.
    tcharlan19's Avatar
    tcharlan19 Posts: 5, Reputation: 1
    New Member
    		  
    #3

    Apr 8, 2010, 05:26 PM
    Bin Restaurant Corp preferred stock has market price of $18. If it has a yearly dividend of $2.50, what is your expected rate of return if you purchase the stock at its market price?
    tcharlan19's Avatar
    tcharlan19 Posts: 5, Reputation: 1
    New Member
    		  
    #4

    Apr 8, 2010, 05:29 PM

    I think the answer is 13.89%
    srivathsan2010's Avatar
    srivathsan2010 Posts: 1, Reputation: 2
    New Member
    		  
    #5

    Jan 18, 2011, 06:06 AM
    The formula is "Price of the stock = Div/(rate-growth)
    70 = 4.90/(r-0.06)
    r-0.06 = 4.90/70
    r-0.06 = 0.07
    r = 0.07+0.06 = 0.13 = 13%
    sassy_sc2012's Avatar
    sassy_sc2012 Posts: 2, Reputation: 1
    New Member
    		  
    #6

    Jun 1, 2012, 11:19 AM
    How do I compute the growth rate with the following information:

    Common stock selling price $36.75, par value of $5
    Recent dividend payment $1.32
    EPS has increased from $1.49 to $3.06 in the past five years
    Required rate of return 15%
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Internal growth rate [ 6 Answers ]

How do you calculate internal growth if you are given ROE 20%, Payout ratio 40%, and equity debt ratio 60%

Internal growth rate [ 1 Answers ]

How do you figure out the internal growth rate

Calculate growth rate [ 3 Answers ]

I am trying to calculate the earnings growth rate, the dividend growth rate and the stock selling price based on the following information: EPS 2007 $1,200,000 2002 $816,000 Dividends per Share 2007 $600,000 2002 $420,000

Determining 1099 tax rate [ 1 Answers ]

Hello, Can someone guide me in determining what taxes I will be paying on a non-qualified dividend in 2006 with a 1099? I live in NY, my primary employment income is $110k, and the 1099 will be for $10k in dividends. Thanks.

View more questions Search