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MCD2170 - T3 - 2025 Week 7 Post class homework

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Question textThe ordinary shares of NCP are expected to pay $1.25 per share in dividends at the end of this year. Dividends are expected to grow at an annual rate of 9.80% forever.Note: for calculation questions in the following parts, round the answers to 2 decimal placesa) If NCP's current market price is $30 per share, the share's expected rate of return is Answer 1 Question 5[input]%b) If your required rate of return is 15% p.a., the value of the share for you is $Answer 2 Question 5[input]c) You should Answer 3 Question 5[select: , not buy, buy] the share because the expected rate of return is Answer 4 Question 5[select: , less, more] than your required rate of return or the value of the share is Answer 5 Question 5[select: , higher, lower] than the current market price.

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Let's work through each part step by step and evaluate all options before confirming the conclusions. Option a (the expected rate of return when price is $30): The stock pays D1 = $1.25 at the end of this year and dividends are expected to grow at g = 9.80% forever. With a current price P0 = $30, the Gordon growth model implies the required formula for the expected rate of return is r = (D1 / P0) + g. Compute D1 / P0 = 1.25 / 30 = 0.041666..., which is 4.1667%. Add the g......Login to view full explanation

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You are evaluating the purchase of Somners Resources' ordinary shares that just paid a dividend of $1.80. You expect the dividend to grow at a rate of 12%, indefinitely. You estimate that a required rate of return of 17.5% will be adequate compensation for this investment. Assuming that your analysis is correct, what is the highest price you would be willing to pay per share if you were to purchase them today?

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MCD2170 - T3 - 2025 Week 7 Post class homework

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ABC, Inc. just paid a dividend of $2. ABC expects dividends to grow at 10% annually forever. The return on shares like ABC, Inc. is typically around 12%. What is the most you would pay for ABC’s share?

ALP’s most recent dividend was $2.00 per share and is selling today for $70. The dividend is expected to grow at 7% per year for the foreseeable future. Should you purchase the share if the market return is 10% on investments with comparable risk?

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MCD2170 - T3 - 2025 Week 7 Post class homework

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类似问题

ABC, Inc. just paid a dividend of​ $2. ABC expects dividends to grow at​ 10% annually forever. The return on shares like​ ABC, Inc. is typically around​ 12%. What is the most you would pay for ABC’s share?

ALP’s most recent dividend was​ $2.00 per share and is selling today for​ $70. The dividend is expected to grow at ​ 7% per year for the foreseeable future. Should you purchase the share if the market return is​ 10% on investments with comparable​ risk?

Using a dividend discount model, find the intrinsic value (price at time zero) for a firm whose expected dividend is $1.92 and growth in dividends for year 2, 3, and 4 is 23.2% and constant growth afterwards is 0.54%. The cost of equity is 9.21%. (Answer in 2 decimal places, 6.21 for $6.21).

Using a dividend discount model, find the intrinsic value (price at time zero) for a firm whose expected dividend is $1.37 and growth in dividends for year 2, 3, and 4 is 13.8% and constant growth afterwards is 1.42%. The cost of equity is 6.67%.

AWSM has just paid a dividend of $1.24 and is expected to increase the future dividends at a rate of 3% per year indefinitely. If you, as a shareholder, require 12% per year, what is the current price per share?

更多留学生实用工具

希望你的学习变得更简单

ABC, Inc. just paid a dividend of $2. ABC expects dividends to grow at 10% annually forever. The return on shares like ABC, Inc. is typically around 12%. What is the most you would pay for ABC’s share?

ALP’s most recent dividend was $2.00 per share and is selling today for $70. The dividend is expected to grow at 7% per year for the foreseeable future. Should you purchase the share if the market return is 10% on investments with comparable risk?