The last dividend just paid by Quantum Inc. was $2.00. Quantum's growth rate is
expected to be a constant 15 percent for 3 years, after which dividends are expected to
grow at a rate of 10 percent forever. Quantum's required rate of return on equity (ks) is
14 percent. What is the current price of Quantum's common stock?
7) Analysts expect Marble Comics to pay shareholders $1.00 per share annually over the
next five years. After that, the dividend will be $1.50 annually forever. Given a
discount rate of 10%, what is the value of the stock today?
8) ABC company is expected to experience a 40% annual growth rate for the next 3 years
(years 1-3) and a 25% annual growth rate for the two following years (years 4 and 5). By
the end of 5 years, ABC's growth rate will slow to 10% percent per year indefinitely.
Stockholder require a return of 12% on ABC's stock. The most recent annual dividend
(D0 ), which was just paid yesterday, was $5.00 per share. Calculate the value of the
stock today, based on the assumptions above.
6) Current price of Quantum's common stock = D1/(1+r) + D2/(1+r)^2 + D3/(1+r)^3 + D4/(r-g)*1/(1+r)^3 Current price of... View the full answer
- Hi, Thank you again for providing the solutions. Is their a way to solve these problems with the financial calculator using NPV?
- Apr 05, 2018 at 10:39am
- This type of problem is a multi stage growth it needs to be solved using equation method.
- Apr 05, 2018 at 10:52am
- Each question has different instruction so its needs to be used equation method
- Apr 05, 2018 at 10:53am
- my professor taught us these problems using cash flows and calculating NPV. for example number 7 CF0=0 CF1=1 CF2=1 CF3=1 CF4=1 CF5=16 I=10 then if you calculate NPV the answer is 13.1
- Apr 05, 2018 at 11:26am