You are given the following information about three stocks:
Chapman Tech is expected to pay a $ 1.20 dividend at the end of the year. The required return on Chapman Tech's stock is 11% and its dividend is expected to grow at a constant rate of 7% per year.
Rust Petroleum is expected to pay a $ 1.50 dividend at the end of the year. Rust Petroleum's dividend yield and capital gains yield both equal 6%.
Schubert Fabric's current stock price is $15 per share, its required return is 13%, and its dividend yield is 8%.

Use the constant growth valuation formula to evaluate each stock's next dividend , current price, required return, expected dividend growth rate, and dividend yield. Assume the market is in equilibrium. In the table below, indicate which stock has the highest value for each of these metrics.

Which stock has the highest Chapman Tech Rust Petroleum Schubert Fabric
Expected Dividend (D1)=
Current stock Price (P0)=
Required return (rs) =
Expected Dividend growth rate (g)=
Dividend yield (Dy) =
Capital gains yield=

Capital gains yield= 7% Capital gains yield= Expected dividend growth rate (for constant growth model)

Using the Dividend Discount (Constant Growth) Model
Po= D1/ (rs-g)

Dividend for next year= D1 = $1.20
Cost ...

Solution Summary

Using the constant growth valuation formula, evaluates for each of the three stocks, next dividend , current price, required return, expected dividend growth rate, and dividend yield.

Suppose that in 2006 the expected dividends of the stocks in a broad market index equaled $210 million when the discount rate was 9.5% and the expected growth rate of the dividends equaled 6.5%. Using the constantgrowthformulaforvaluation, if interest rates increase to 10.5%, what will the value of the market change by?

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Please help with the following question.
In 2009 the expected dividends of the stocks in the broad market index are equal to $240 million when the discount rate was 8% and the expected growth rate of the dividends equalled 6%. Using the constantgrowthformulaforvaluation, if interest rates increase to 9% the value of the

Thomas Brothers is expected to pay $0.50 a share (that is, D1 = $0.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the stockâ??s current value per share?
I have tried to solve this on my financial calculator but am not sure I am doing it

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