The expected dividend one year from now is $2 and the required return is 13%

| June 14, 2018

1 Llano’s stock is currently selling for $40.00. The expected dividend one year from now is $2 and the required return is 13%. What is this firm’s dividend growth rate assuming the constant dividend growth model is appropriate?2 The current price of XYZ stock is $80.00. Dividends are expected to grow at 5% indefinitely and the most recent dividend was $2.75. What is the required rate of return on XYZ stock? 3. ABC Corporation’s common stock dividend yield is 3.61%, it just paid a dividend of $2.75, and is expected to pay a dividend of $2.89 one year from now. Dividends are expected to grow at a constant rate indefinitely. What is the required rate of return on ABC stock?4 Suppose Pale Hose, Inc. has just paid a dividend of $1.80 per share. Sales and profits for Pale Hose are expected to grow at a rate of 8% per year. Its dividend is expected to grow by the same amount. If the required return is 14%, what is the value of a share of Pale Hose?

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