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HW3 - Stock Most Recent Dividend $2.89 Growth Rate 5 Price...

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Homework #3 BUS241 Stocks 1. Solve for the Holding Period Return, Dividend Yield, and Capital Gains Yield for the following Proctor and Gamble stock: Date Close Jan-08 $ 73.59 Dec-07 $ 74.00 Dec-07 $ 69.22 Nov-07 $ 0.35 Dividend Oct-07 $ 70.44 Sep-07 $ 65.04 Sep-07 $ 61.52 Aug-07 $ 0.35 Dividend Jul-07 $ 61.35 Jun-07 $ 63.55 Jun-07 $ 63.21 May-07 $ 0.35 Dividend Apr-07 $ 63.22 Mar-07 $ 62.75 Mar-07 $ 64.90 Feb-07 $ 0.31 Dividend Jan-07 $ 63.72 2. Use the Constant Dividend Discount Model to solve for the intrinsic value (fundamental price) of Walmart Stock: Most Recent Dividend: $2.25 Growth Rate: 4% Expected Return 8% 3. Use the Constant Dividend Discount Model to solve for the expected return for Costco
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Unformatted text preview: Stock: Most Recent Dividend: $2.89 Growth Rate: 5% Price of the Stock: $65.72 4. If the average P/E ratio for the department store industry is 25, and Target’s Earnings per Share is: $1.45. What should the stock’s price be? 5. If Macy’s recent earnings per share was $4.36, payout ratio is 70%, earnings are expected to go at 6% for the next 4 years, then the earnings growth rate will instantaneously drop to 4%. Your expected return on the stock is 9%. What should the stock’s price be today?...
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