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# Stock price for Dynegy Stock

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You believe that the required return on Dynegy stock is 16% and that the expected dividend growth rate is 12%, which is expected to remain constant for the foreseeable future. Is the stock currently overvalued, undervalued, or fairly priced?

a. Overvalued
b. Undervalued
c. Fairly priced

Based on the quote, a good estimate of EPS over the last four quarters is:

a. \$0.80
b. \$1.21
c. \$1.68
d. \$1.91
e. \$2.54

Etling Inc.'s dividend is expected to grow at 5% for the next 2 years and then at 3% forever. If the current dividend is \$2 and the required return is 14%, what is the price of the stock?

a. \$19.43
b. \$23.82
c. \$25.15
d. \$27.58
e. \$29.70

Suppose the Pale Hose Corp. is expected to pay a dividend next year of \$2.25 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 20% for the following 2 years and then at 5% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 15%, what is the value of a share of Pale Hose?
a. \$22.75
b. \$26.00
c. \$28.50
d. \$32.40
e. \$39.25

https://brainmass.com/economics/finance/stock-price-dynegy-stock-80585

#### Solution Preview

1. Stock Price = D1/(r-g) = D0*(1+g)/(r-g)
=1.00*(1+12%)/(16%-12%) =28
Overvalued

2. EPS = Market price / PE = ...

#### Solution Summary

Stock price is determined for Dynegy Stocks. Foreseeable futures constant remains are determined.

\$2.19