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DPS, Constant Growth, Corporate & Rate of Return - Valuation

DPS CALCULATION
Warr Corporation just paid a dividend of $1.50 a share (that is, D= $1.50). The dividend is expected to grow 7% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per share for each of the next 5 years?

CONSTANT GROWTH VALUATION
Harrison Clothiers' stock currently sells for $20.00 a share. It just paid a dividend of $1.00 a share (that is D0= $1.00). The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the required rate of return?

CORPORATE VALUATION
Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF s expected to grow at a constant rate of 5% per year indefinitely. Smith has no debt or preferred stock, and its WACC is 10%. If Smith has 50 million shares of stock outstanding, what is the stock's value per share.

PREFERRED STOCK RATE OF RETURN
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $60, (b) $80, (c) $100, and (d) $140?

Solution Summary

The solution performs DPS Calculation, Constant Growth Valuation, Corporate Valuation and Preferred stock rate of return in given examples.

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