Penn Electric just developed a revolutionary new type of method used to hydraulically generate electricity which is extremely efficient for use in a certain geographic location. As a result, Penn Electric is expected to experience a 15 percent rate of growth for the next 5 years, after which, growth will slow to 5 percent into the foreseeable future. The market requires a 12 percent return on Penn Electric stock and the most recent dividend paid was $1.75 per share. Calculate the theoretical value of the stock today.
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Penn Electric just developed a revolutionary new type of method used to hydraulically generate electricity which is extremely efficient for use in a certain geographic location. As a result, Penn Electric is expected to experience a 15 percent rate of growth for the next 5 years, after which, growth will slow to 5 percent into the foreseeable future. The market requires a 12 percent return on Penn Electric stock and the most recent dividend paid was $1.75 per share. Calculate the theoretical value of the stock today.
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- Due to an extensive investment in research and development, Banana, Inc., recently developed a new wireless communication system that should greatly increase the stock's dividend. One analyst believes the current annual dividend of $1 will increase by 20% for each of the next three years and then 6% for the foreseeable future. Calculate the intrinsic value per share of the company's stock assuming an investor's required rate of return of 8%. A) $91.50 B) $78.49 C) $76.35 D) $95.91The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 20% rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro’s investors require?b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested?c. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price?d. What if Nogro eliminated the dividend?IoT Inc., is in the business of measuring Southwest Water’s water demand in Exeter. At the end of the year IoT is expected to pay a $4 dividend per share. It reinvests 40% of its earnings and is growing at 4% a year. a. Assume that IoT continues on this growth trend. What is the expected longrun rate of return from purchasing the stock at $100? b. What part of the price of $100 is attributable to the present value of growth opportunities? Briefly explain your calculations.
- Home Company paid an annual dividend of RM0.90 per share this year. The company expects that the dividend will grow an annual rate of 15 percent for the next five years and then drop to a gradual growth rate of 7 percent indefinitely. The required rate of return is 10 percent and the share is currently trading at RM48. i) Calculate the intrinsic value of the share today. ii) Justify whether you would buy the share. Please answer both questions, answer with your own words and opinion. not in point form but paragraphGolf Ball Inc. expects earnings to be $10,000 per year in perpetuity if it pays out all of its earnings in dividends. Suppose the firm has an opportunity to invest $1,000 of next year's earnings to upgrade its machinery. It is expected that this upgrade will increase earnings in all future years (starting two years from now) by $140. Assume that Golf Ball's next dividend is one year from now. The required rate of return is 12%. What is the value of Golf Ball Inc. if it undertakes the upgrade?The stock of Nogro Corporation is currently selling for $28 per share. Earnings per share in the coming year are expected to be $7.00. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 25% rate of return per year. This situation is expected to continue indefinitely. Required: Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro’s investors require? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price? Note: Round your answer to 2 decimal places. What would happen to its…
- Worldwide Inc, a large conglomerate, has decided to acquire another firm. Analysts are forecasting a period (2 years) of extraordinary growth (20 percent). followed by another 2 years of unusual growth (10 percent), and finally a normal (sustainable) growth rate of 6 percent annually. If the last dividend was DO= $1.00 per share and the required return is 8 percent, what should the market price be today? 10:$68.87 9.572.76cohen cutting edge limited (CCE) has done it again by creating a vaccine for the novel corona virus. CCE is expected to pay a dividend of $2.15 next year after which dividends should enjoy growth of 17% for 2 years. Dividend growth is then expected to fall to 9% for 1 year before setting at a constant growth of 3% for the foreseeable future. the cost of capital is 22%. i) Calculate CCE's share price today (P0) ii) Calculate the expected share price three years from today (P3) iii) Calculate the dividend yeild for year 4. PART B Dolson & Company Limited (D&C) has three prefered stocks on the market, eachwith a par value of $90. The stocks have dividends and yeild as presented in the table below Name Dividends Yeold Series X 6.5% 10.5% Series Y 8% 9.8% Series Z 7.2% 11.1% Calculate the…The stock of Nogro Corporation is currently selling for $16 per share. Earnings per share in the coming year are expected to be $4 The company has a policy of paying out 40% of its earnings each year in dividends. The rest es retained and invested in projects that earn a 25% rate of return per year. This situation is expected to continue indefinitely Required: a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro's investors require? (Do not round intermediate calculations.) Rate of retur Return to question Answer is complete and correct. 250% b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing was reinvested?
- News Corp is expected to pay a dividend of $0.8 in one year. The dividend is expected to grow at 12% in the following 3 years and then at a constant rate of 4% per annum indefinitely. If the required rate of return is 12%, what is the price of the company's share today? Please illustrate your answer using a timeline.California Fishing Company (CFC) is expected to pay a dividend next year of $50 per share. Future Dividends for CFC are expected to grow at a rate of 5% per year indefinitely. If an investor is currently willing to pay $500 each CFC share, what is the investor’s required return for this investment?Reizenstein Technologies (RT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, RT is expected to experience a 19% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and RT's growth rate will slow to 8% per year indefinitely. RT has a 15% weighted average cost of capital. The most recent annual free cash flow (FCF0) was $1.55 million. For every question below, enter your answer in millions. Round your answers to two decimal places. /!\ Be mindful of rounding errors! Rounding intermediary calculations may lead to slight errors. Calculate RT's expected FCFs for t = 5. Do not round intermediate calculations. Answer What is the horizon value at t = 5 (HV5)? Do not round intermediate calculations. Answer What is the present value of the horizon value (HV5)? Do not round intermediate…