Problem 7.21 – Highest and Lowest Dividend Yields
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
11th Edition
Determine the highest and lowest dividend yields over the past year for a company, assuming a constant dividend.
Determine the highest and lowest dividend yields over the past year for a company, assuming a constant dividend.
Determine if a stock is priced correctly given the expected dividend growth rates for different time periods, the required rate of return, and other potential factors affecting the stock price.
Determine the required return for a company’s stock, given a constant dividend growth rate expected by investors.
Determine the required return for a company’s stock, given a negative dividend growth rate, and discuss the plausibility of this number and potential reasons for the negative growth in dividends.
Calculate the closing price for a company’s stock using the dividend yield and compare it to the actual closing price. Then, determine the required return for the stock using the dividend discount model and the actual stock price, considering the projected dividend growth rate.
The Sunset Corp. currently has an EPS of $4.25 and the benchmark PE for the company is 19. Earnings are expected to grow at 5 percent per year. (Your numbers will vary). Determine the stock price today, the stock price in one year, and the implied return.
The Daniela Company’s earnings are expected to grow by 11% in the next year and the target stock price is to be determined using the company’s historical average PE as a benchmark. (Your numbers will vary). Determine the target price given stock price and EPS data.
Given the historical information of a company’s earnings and PE ratios, the high and low target stock prices can be calculated using expected growth rate in earnings. Find the high and low target stock prices given three years of High price, Low Price and EPS data.
Find the target share price years into the future given an EPS, earnings growth and benchmark PE ratio.
Determine the target price and the stock price today using the terminal stock price and benchmark PE ratio method. What is the target stock price in five years and the stock price today for a company that just paid a dividend of $1.41, with dividends expected to grow at 13 percent over the next five years and a payout ratio of 30 percent and a benchmark PE of 19 in five years, assuming a required return of 11 percent on the stock? (Your numbers will vary).