Home / Questions / Most corporations pay quarterly dividends on their common stock rather than annual dividen...
Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. |
Required: |
(a) |
Suppose a company currently pays an annual dividend of $3.20 on its common stock in a single annual installment, and management plans on raising this dividend by 6 percent per year indefinitely. If the required return on this stock is 12 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
Current share price | $ |
(b) |
Now suppose the company in (a) actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $.80 per share, as it has for the previous three quarters. What is your value for the current share price now? (Hint: Find the equivalent annual end-of-year dividend for each year.) (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
Current share price | $ |
Apr 10 2020 View more View Less
Multiple Departments; Applying OverheadWoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined...
Jun 28 2020Business assumptions focus on all of the following except: a. resource availability b. Competitive actions c. mThe victims of a certain disease being treated at Wake Medi...
Aug 09 2020On February 28, Master, Inc., had total assets with a fair market value of $1,200,000 and total liabilities of $990,000. On January 15, Master made a monthly installment ...
Aug 08 2021For the next stage of the strategic planning process you'll focus on your chosen company's sales promotion and personal selling decisions. Use the following exercises to ...
Jul 24 2021Why would a firm use a balanced scorecard in evaluating divisional performance?Here is a tip:The balanced scorecard is a set of multiple performance measures that conside...
May 13 2021Write balanced nuclear equations for the following:a. Formation of Mn-52 by positron emission.b. Formation of Ac-228 by -emission.c. Formation of Np-232 by -decay.
Jul 26 2021What is the probability that Z is less than or equal to3.23?.9994.9995.9997
Aug 21 2021TRUE/FALSE/DEPENDS and justify your answer! CBA analysts typically evaluate only one project at a time. Because government expenditures are fixed each year, in asking peo...
May 26 2020Vanguard seems too good. There must be a downside.” Discuss
Aug 08 2020Completing a Balance Sheet and Inferring Net Incomeerry Lloyd and Joan Lopez organized Read More Store as acorporation; each contributed $50,000 cash to start the busines...
May 02 2018