Stock Valuation
Problems
If you expect the dividend in one year to
be $ 2.25 and you expect it to grow at a
constant rate each year of 5%, what do
you believe the stock is worth assuming
your RoR on the stock is 15.5?
Mtech has lost a big contract, so its sales
are falling. As a result, the company’s
earnings and dividends are declining at a
constant rate of 5% per year. If D0 = $5
and ks = 15%, what is value of McCue
Mining’s stock?
Mtech Corp. investors expect Mtech to
begin paying dividends, with the first
dividend of $2 coming 1 year from today
and should grow at a constant rate of 8%
per year. If the rate of return is 15%, what
is the value of the stock today?
Mtech Corp. is expanding rapidly, and it
currently needs to retain all of its earnings;
hence, it does not pay any dividends. However,
investors expect Mtech to begin paying
dividends, with the first dividend of $2 coming 3
years from today. The company should grow at
a constant rate of 8% per year. If the rate of
return is 15%, what is the value of the stock
today?
Mtech Corp. is expanding rapidly, and it
currently needs to retain all of its earnings;
hence, it does not pay any dividends. However,
investors expect Mtech to begin paying
dividends, with the first dividend of $2 in one
year. The dividend should grow rapidly – at a
rate of 50% per year – during years 2 and 3.
After year 3, the company should grow at a
constant rate of 8% per year. If the rate of return
is 15%, what is the value of the stock today?
Mtech Corp. is expanding rapidly, and it
currently needs to retain all of its earnings;
hence, it does not pay any dividends. However,
investors expect Mtech to begin paying
dividends, with the first dividend of $2 coming 3
years from today. The dividend should grow
rapidly – at a rate of 50% per year – during
years 4 and 5. After year 5, the company should
grow at a constant rate of 8% per year. If the
rate of return is 15%, what is the value of the
stock today?
You expect your company to pay the following dividend
pattern for three years as follows: D1 = $1, D2 = $2,
D3=$3. After three years the dividends are expected to
grow at a constant rate of 6% per year. If the required rate
of return demanded by investors is 15%, what is the current
price of your companies stock? If your stock was selling on
the market for $25.50 would this stock be in equilibrium?
Radtech is a high-tech. The company is three years old
and has experienced spectacular growth since its
inception. It is not expected for Radtech to pay dividends
for the next 5 years. You believe they will start paying in
year six with the first dividend being $25. After that you
expect Radtech to pay a constant dividend of $6 per share
the foreseeable future. If the appropriate discount rate is
12% and the current market price is $25, is the stock work
the price on the market?