# Project #37117 - Equity Markets and Stock Valuation

1.

 E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a \$20 dividend per year, but the first dividend will not be paid until 20 years from today.
 Required: If you require a return of 9.00 percent on this stock, how much should you pay today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
 Current stock price \$

2.

 Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next eight years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of \$14.00 per share 9 years from today and will increase the dividend by 5.75 percent per year thereafter.
 Required: If the required return on this stock is 13.75 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 \$

3.

 Apocalyptica Corporation is expected to pay the following dividends over the next four years: \$5.80, \$16.80, \$21.80, and \$3.60. Afterwards, the company pledges to maintain a constant 5.75 percent growth rate in dividends, forever.
 Required: If the required return on the stock is 8 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 \$

4.

 ang Corp. is growing quickly. Dividends are expected to grow at a rate of 31 percent for the next three years, with the growth rate falling off to a constant 7.1 percent thereafter.
 Required: If the required return is 12 percent and the company just paid a \$2.55 dividend, what is the current share price? (Hint: Calculate the first four dividends.) (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
 Current share price \$

5.

 Gontier Corporation stock currently sells for \$64.18 per share. The market requires a return of 12 percent on the firm’s stock.
 Required: If the company maintains a constant 5.75 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
 Dividend per share \$

6.

 Davis, Inc., currently has an EPS of \$2.01 and an earnings growth rate of 8 percent. The benchmark PE ratio is 24.

 Required: What is the target share price in 6 years? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 Projected stock price \$

7.

 Sully Corp. currently has an EPS of \$2.51, and the benchmark PE ratio for the company is 21. Earnings are expected to grow at 6 percent per year.

 Requirement 1: What is your estimate of the current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 Stock price \$

 Requirement 2: What is the target stock price in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 Stock price in one year \$

 Requirement 3: Assuming that the company pays no dividends, what is the implied return on the company's stock over the next year? (Do not round intermediate calculations. Round your answer to 1 decimal place (e.g., 32.2).)

 Implied return %

 Subject Business Due By (Pacific Time) 08/04/2014 04:00 pm
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