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BUS_320_Chapter_9_Assignment - nonconstant growth of 20 for...

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BUS 320 Chapter 9 Assignment 1) Raymond Edwards, Inc. is expected to pay a $0.60 per share dividend at the end of the year (that is, D 1 = $0.60). The dividend is expected to grow at a constant rate of 10% a year. The required rate of return on the stock, r s , is 15%. What is the stock’s value per share? 2) Harrison Clothiers’ stock currently sells for $20 a share. It just paid a dividend of $1.00 a share (that is, D 0 = $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? 3) Hart Enterprises recently paid a dividend, D 0 , of $1.25. It expects to have
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Unformatted text preview: nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm’s required return is 10%. What is the firm’s intrinsic value today, P ? 4) Fee Founders has perpetual preferred stock outstanding that sells for $60 a share and pays a dividend of $5 at the end of each year. What is the required rate of return? 5) Investors require a 15% rate of return on Levine Company’s stock (that is, r s = 15%). What is its value if the previous dividend was Do = $2 and the investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 5% or (4) 10%?...
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