Suppose the dividend today, D0, is $2.50, and the growth rate (g) is expected to be 25% for the next three years, followed by a normal growth rate (g) of 6% thereafter. Assume the investors require 13%, rs. Calculate the value of the stock today, P0. This is the supernormal growth problem.

USE appropriate symbols for each answer, that is, $ and %, when necessary.
52 Week
Hi Lo Stock Sym Div Yld PE Vol Close Net Chg
22 16.50 A-gate ATG 1.08 ? 13 564 18.75 -.25

What is the annual dividend per share?
What did this stock close at yesterday?
Calculate the dividend yield.
How many shares were traded?
What did the stock close at the day before yesterday? Calculate the earnings per share.

From year 4 onwards, the dividends would be growing at 6% per year indefinitely. This is a growing perpetuity, the present value of this is
given as Dividend/(ke-g)
Ke = cost of equity=13%, g= growth

PV in Year ...

Solution Summary

The solution calculates the value of the stock today summing investors require 13%. The annual dividend per share is given.

I need help with this problem. I know the answer but I don't see how they got it.
a) A company plans to increase its dividend at a rate of 5% per year indefinitely, what will be the dividendpershare in 10 years? $6.52
b) If the dividendpershare is expected to be $5.87 pershare at the end of 5 years at what annual rate

The stock of Pills Berry Company is selling at $60 pershare. The firm pays a dividend of $1.80 pershare.
a. What is the annualdividend yield?
b. If the firm has a payout rate of 50 percent, what is the firm's P/E ratio?

Suppose you are willing to pay $30 today for a share of stock which you will expect to sell at the end of year one for $32. If you require and annual rate of return of 12%, what must be the amount of the annualdividend which you expect to receive at the end of year one?

What is the current value of a share of a common stock to an investor who requires a 12% annual rate of return, if next year's dividend, D1, is expected to be $3 pershare and dividends are expected to grow at an annual rate of 4% for the foreseeable future?

1. You own 1000 shares of XYZ Corp. and the company is about to pay a 25% stock dividend. The stock currently sells for $100 pershare. What will be the number of shares that you hold and the total value of your equity position after the dividend is paid?
2. DCH Industries pays a quarterly dividend of $2 pershare. The div

Currently Chester is paying a dividend of $19.34 (pershare). If this dividend were raised by $3.64, given its current stock price what would be the Dividend Yield?
See attachment.

Corporation A has just paid its annualdividend of $2.50 a share. This dividend is expected to grow at a rate of 5% annually forever, and the appropriate discount rate for a company with Company A's risk profile at 11%.
Use the dividend discount model to determine the value of a share of Polar Bear's stock.

ABC Corp. has had the indicated earnings pershare (EPS) over the last 3 years:
Year EPS
2003 $3.00
2004 $2.00
2005 $1.00
a) If the company's dividend policy was based on a constant payout ratio of 50%, determine the annualdividend for each year.
b) If the firm's dividend policy was based on a fixed dol

Please walk through the steps to do this on a TI BA II Plus and the rationale.
Flanigan Corporation has just paid an annualdividend of $1.50 pershare (D0 = $1.50). The dividend is expected to grow 5% per year for the next 3 years, and then 10% a year thereafter.
Calculate FC's expected dividendpershare for each of the

Winkie Baking has just announced a 100 percent stock dividend. The annual cash dividendpershare was $2.40 before the stock dividend. Winkie intends to pay $1.40 pershare on each of the new shares. Compute the percentage increase in the cash dividend rate that will accompany the stock dividend.