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

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?

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.

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

Stock Valuation
Most corporations pay quarterly dividends on their common stock rather than annualdividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. (Round yo

1. Blakeslee Machinery announced this morning that their next annualdividend will be increased to $2.10 a share and that future dividends will be lowered by 2 percent per year. The stock price after the announcement settled at $16 a share. What is the firm's cost of equity?
a. .33%
b. 9.33%
c. 11.13%
d. 13.33%
e. 15.13%

Consider the stock of Davidson Company, which will pay an annualdividend of $2 one year from today. The dividend will grow at a constant annual rate of 5 percent, forever. The market requires a 12 percent return on the company's stock.
a. What is the current price of a share of the stock?
b. What will the stock price be

Calculate the cash dividends required to be paid for each of the following preferred stock issues:
a. The semiannualdividend on 6% cumulative preferred, $50 par value, 30,000 shares authorized, issued, and outstanding.
b. The annualdividend on $3.60 cumulative preferred, 400,000 shares authorized, 180,000 shares issued

Dollar, Inc. wants to offer preferred stock for sale at a price of $25 a share. The company wants its investors to earn an 8.25 percent rate of return. What is the minimum annualdividend the firm will need to pay pershare?
Answer
$2.06
$3.73
$4.15
$4.90
$1.72

Please help with the following problem.
3M pays quarterly cash dividends on its common stock. Suppose 3M forecasts earnings pershare of $4.00 this year and $3.80, $3.20, $4.80,and $4.08 over the following four years, respectively, and believes it can maintain a long-term payout ratio of 1/4. 3M revises its dividends once