Chapter 9 Practice Quiz
A perpetual preferred stock's par value is $25 per share and it pays an annual dividend of $1.75 per share. If its price is $25.34 per share, what annual return do investors require?
Required return = D/P = 1.75/25.34 = 0.0691
A company's weighted average cost of capital is 10.3% per year and the market intrinsic value of its debt is $320.6 million. The company's free cash flow last year was $8.5 million and it is expected to grow 20% per year for the next three years. Thereafter, the free cash flow is expected to grow forever at a rate of 8.1% per year. If the company has seven million shares of common stock outstanding, what is the intrinsic value per share?
CF1 = 8.5(1.2) = 10.2M, CF2 = 8.5(1.22) = 12.2M, CF3 = 8.5(1.23) = 14.7M Terminal intrinsic value as of year 2 = CF3/(WACC - g) = 14.7M/(0.103 - 0.081) = 668.2M Company intrinsic value = 10.2M/1.103 + (12.2M + 668.2M)/1.1032 = 568.5M Equity intrinsic value = 568.5M - 320.6M = 247.9M Intrinsic value per share = 247.9M/7M = 35.41
A company's free cash flow last year was $11.3 million and the free cash flow is expected to grow forever at a rate of 4.6% per year. The company's weighted average cost of capital is 12.7% per year and the market intrinsic value of its debt is $50 million. If the company has 2.5 million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 11.3M(1.046)/(0.127 - 0.046) = 145.92M Equity intrinsic value = 145.92M - 50.0M = 95.92M Intrinsic value per share = 95.92M/2.5M = 38.37
A company's weighted average cost of capital is 13.1% per year and the market intrinsic value of its debt is $60.1 million. The company's free cash flow last year was $12.3 million and the free cash flow is expected to grow forever at a rate of 6.7% per year. If the company has six million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 12.3M(1.067)/(0.131 - 0.067) = 205.06M Equity intrinsic value = 205.06M - 60.1M = 144.96M Intrinsic value per share = 144.96M/6M = 24.16
A company's free cash flow next year is expected to be $2.3 million and the free cash flow is expected to grow forever at a rate of 5.4% per year. The company's weighted average cost of capital is 9.4% per year and the market intrinsic value of its debt is $23.6 million. If the company has four million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 2.3M/(0.094 - 0.054) = 57.5M Equity intrinsic value = 57.5M - 23.6M = 33.9M Intrinsic value per share = 33.9M/4M = 8.48
A company's weighted average cost of capital is 10.8% per year and the market intrinsic value of its debt is $33.1 million. The company's free cash flow next year is expected to be $4.7 million and the free cash flow is expected to grow forever at a rate of 3.7% per year. If the company has three million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 4.7M/(0.108 - 0.037) = 66.20M Equity intrinsic value = 66.2M - 33.1M = 33.1M Intrinsic value per share = 33.1M/3M = 11.03
A company's weighted average cost of capital is 9.6% per year and the market intrinsic value of its debt is $43.1 million. The company's free cash flow next year is expected to be $5.1 million and the free cash flow is expected to grow forever at a rate of 4.0% per year. If the company has three million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 5.1M/(0.096 - 0.04) = 91.07M Equity intrinsic value = 91.1M - 43.1M = 48.0M Intrinsic value per share = 48.0M/3M = 16.00
A company's free cash flow last year was $7.8 million and the free cash flow is expected to grow forever at a rate of 5.2% per year. The company's weighted average cost of capital is 10.1% per year and the market intrinsic value of its debt is $40.6 million. If the company has three million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 7.8M(1.052)/(0.101 - 0.052) = 167.46M Equity intrinsic value = 167.46M - 40.6M = 126.86M Intrinsic value per share = 126.86M/3M = 42.29
A company's free cash flow next year is expected to be $9.2 million and the free cash flow is expected to grow forever at a rate of 6.2% per year. The company's weighted average cost of capital is 11.7% per year and the market intrinsic value of its debt is $38.2 million. If the company has five million shares of common stock outstanding, what is the intrinsic value per share?
Company intrinsic value = CF1/(WACC - g) = 9.2M/(0.117 - 0.062) = 167.27M Equity intrinsic value = 167.27M - 38.2M = 129.07M Intrinsic value per share = 129.07M/5M = 25.81
Investors require a return of 11.5% per year to hold a stock. The stock's last dividend was $1.25 per share and the dividends are expected to grow 25% per year for three years. Thereafter, the dividends are expected to grow at a constant rate of 7.1% per year. What is the stock's intrinsic value per share?
D1 = 1.25(1.25) = 1.56, D2 = 1.25(1.252) = 1.95, D3 = 1.25(1.253) = 2.44 Terminal value as of year 2 = D3/(k - g) = 2.44/(0.115 - 0.071) = 55.45 Intrinsic value = 1.56/1.115 + (1.95 + 55.45)/1.1152= 47.57
A stock's last dividend was $1.30 per share and the dividends are expected to grow 25% per year for two years. Thereafter, the dividends are expected to grow at a constant rate of 7.0% per year. If investors require a return of 14.5% per year to hold the stock, what is its intrinsic value per share?
D1 = 1.30(1.25) = 1.63, D2 = 1.30(1.252) = 2.03 Terminal value as of year 1 = D2/(k - g) = 2.03/(0.145 - 0.07) = 27.07 Intrinsic value = (1.63 + 27.07)/1.145 = 25.07
Investors require a return of 13.0% per year to hold a stock. The stock's last dividend was $1.75 per share and the dividends are expected to grow 24% per year for three years. Thereafter, the dividends are expected to grow at a constant rate of 8.0% per year. What is the stock's intrinsic value per share?
D1 = 1.75(1.24) = 2.17, D2 = 1.75(1.242) = 2.69, D3 = 1.75(1.243) = 3.34 Terminal value as of year 2 = D3/(k - g) = 3.34/(0.13 - 0.08) = 66.80 Intrinsic value = 2.17/1.13 + (2.69 + 66.80)/1.132= 56.31
A stock's last dividend was $1.84 per share and the dividends are expected to grow 32% per year for three years. Thereafter, the dividends are expected to grow at a constant rate of 6.5% per year. If investors require a return of 13.4% per year to hold the stock, what is its intrinsic value per share?
D1 = 1.84(1.32) = 2.43, D2 = 1.84(1.322) = 3.21, D3 = 1.84(1.323) = 4.23 Terminal value as of year 2 = D3/(k - g) = 4.23/(0.134 - 0.065) = 61.30 Intrinsic value = 2.43/1.134 + (3.21 + 61.30)/1.1342= 52.31
Investors require a return of 14.9% per year to hold a stock. The stock's last dividend was $2.25 per share and the dividends are expected to grow 30% per year for two years. Thereafter, the dividends are expected to grow at a constant rate of 7.5% per year. What is its intrinsic value per share?
D1 = 2.25(1.3) = 2.93, D2 = 2.25(1.32) = 3.80 Terminal value as of year 1 = D2/(k - g) = 3.80/(0.149 - 0.075) = 51.35 Intrinsic value = (2.93 + 51.35)/1.149 = 47.24
A stock's last dividend was $2.34 per share and the dividends are expected to grow 30% per year for three years. Thereafter, the dividends are expected to grow at a constant rate of 9.1% per year. If investors require a return of 16.7% per year to hold the stock, what is its intrinsic value per share?
D1 = 2.34(1.3) = 3.04, D2 = 2.34(1.32) = 3.95, D3 = 2.34(1.33) = 5.14 Terminal value as of year 2 = D3/(k - g) = 5.14/(0.167 - 0.091) = 67.63 Intrinsic value = 3.04/1.167 + (3.95 + 67.63)/1.1672= 55.16
A stock's last dividend was $3.05 per share and the dividends are expected to grow 25% per year for three years. Thereafter, the dividends are expected to grow at a constant rate of 6.5% per year. If investors require a return of 12.8% per year to hold the stock, what is the stock's intrinsic value per share?
D1 = 3.05(1.25) = 3.81, D2 = 3.05(1.252) = 4.77, D3 = 3.05(1.253) = 5.96 Terminal value as of year 2 = D3/(k - g) = 5.96/(0.128 - 0.065) = 94.60 Intrinsic value = 3.81/1.128 + (4.77 + 94.60)/1.1282= 81.47
The risk-free interest rate is 1.6% per year and the market risk premium is 5.8% per year. A stock's last dividend was $1.52 per share and the dividends are expected to grow forever at a constant rate of 6.2% per year. If the stock's current price is $22.44 per share, what is the stock's intrinsic value per share expected to be in five years?
Future intrinsic value = 22.44(1.062)5 = 30.74
A stock's last dividend was $1.52 per share and the dividends are expected to grow forever at a constant rate of 6.6% per year. If the stock's current price is $34.67 per share, what is the stock's intrinsic value per share expected to be in four years?
Future intrinsic value = 34.67(1.066)4 = 44.77
A company's next dividend is expected to be $3.75 per share and the dividends are expected to grow forever at a constant rate. If the company's stock price currently is $44.49 per share and the stock's required return is 12.5% per year, what is the expected annual dividend growth rate?
Grow rate = Required return - dividend yield = 0.125 - 3.75/44.49 = 0.041
A stock's next dividend is expected to be $0.56 per share and the dividends are expected to grow forever at a constant rate. Investors require a return of 9.6% per year to hold the stock. What is the stock's intrinsic value per share expected to be in three years, if the stock's current intrinsic value is $14.56 per share?
Growth rate = 0.096 - 0.56/14.56 = 0.0575 Future intrinsic value = 14.56(1.0575)3 = 17.22
A stock's next dividend is expected to be $1.48 per share and the dividends are expected to grow forever at a constant rate. Investors require a return of 12.3% per year to hold the stock. What is the stock's intrinsic value per share expected to be in three years, if the stock's current intrinsic value is $18.56 per share?
Growth rate = 0.123 - 1.48/18.56 = 0.0433 Future intrinsic value = 18.56(1.0433)3 = 21.08
A stock's next dividend is expected to be $2.05 per share and the dividends are expected to grow forever at a constant rate. Investors require a return of 14.7% per year to hold the stock. If the stock's current intrinsic value is $41.32 per share, what is the stock's intrinsic value per share expected to be in five years?
Growth rate = 0.147 - 2.05/41.32 = 9.74 Future intrinsic value = 41.32(1.0974)5 = 65.76
Investors require a return of 16.1% per year to hold a stock. The stock's next dividend is expected to be $2.88 per share and the dividends are expected to grow forever at a constant rate. What is the stock's intrinsic value per share expected to be in four years, if the stock's current intrinsic value is $39.43 per share?
Growth rate = 0.161 - 2.88/39.43 = 0.088 Future intrinsic value = 39.43(1.088)4 = 55.24
A company's stock price currently is $23.56 per share and the stock's required return is 13.2% per year. If the company's next dividend is expected to be $1.56 per share and the dividends are expected to grow forever at a constant rate, what is the expected annual dividend growth rate?
Growth rate = Required return - dividend yield = 0.132 - 1.56/23.56 = 0.066
A stock's next dividend is expected to be $1.88 per share and the dividends are expected to grow forever at a constant rate. Investors require a return of 13.3% per year to hold the stock. What is the stock's intrinsic value per share expected to be in three years, if the stock's current intrinsic value is $25.16 per share?
Growth rate = Required return - dividend yield = 0.133 - 1.88/25.16 = 0.0583 Future intrinsic value = 25.16(1.0583)3 = 29.82
Investors require a return of 14.4% per year to hold a stock. The stock's next dividend is expected to be $2.28 per share and the dividends are expected to grow forever at a constant rate. What is the stock's intrinsic value per share expected to be in four years, if the stock's current intrinsic value is $32.58 per share?
Growth rate = Required return - dividend yield = 0.144 - 2.28/32.58 = 0.07 Future intrinsic value = 32.58(1.07)4 = 42.71
A company's stock price currently is $78.41 per share and the stock's required return is 14.9% per year. If the company's next dividend is expected to be $5.50 per share and the dividends are expected to grow forever at a constant rate, what is the expected annual dividend growth rate?
Growth rate = Required return - dividend yield = 0.149 - 5.50/78.41 = 0.079
A company's next dividend is expected to be $3.25 per share and the dividends are expected to grow forever at a constant rate, if the company's stock price currently is $59.23 per share and the stock's required return is 15.1% per year, what is the expected annual dividend growth rate?
Growth rate = Required return - dividend yield = 0.151 - 3.25/59.23 = 0.096
A stock's last dividend was $3.05 per share and the dividends are expected to grow forever at a constant rate of 8.5% per year. If investors require a return of 16.3% per year to hold the stock, what is the stock's intrinsic value per share?
Intrinsic value = 3.05(1.085)/(0.163 - 0.085) = 42.43
Investors require a return of 11.9% per year to hold a stock. The stock's next dividend is expected to be $0.83 per share and the dividends are not expected to grow. What is its intrinsic value per share?
Intrinsic value = D/k = 0.83/0.119 = 6.97
Investors require a return of 9.9% per year to hold a stock. The stock's last dividend was $1.23 per share and the dividends are not expected to grow. What is the stock's intrinsic value per share?
Intrinsic value = D/k = 1.23/0.099 = 12.42
Investors require a return of 14.4% per year to hold a stock. The stock's last dividend was $1.29 per share and the dividends are not expected to grow. What is the stock's intrinsic value per share?
Intrinsic value = D/k = 1.29/0.144 = 8.96
A stock's next dividend is expected to be $1.45 per share and the dividends are not expected to grow. If investors require a return of 12.6% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D/k = 1.45/0.126 = 11.51
Investors require a return of 7.8% per year to hold a perpetual preferred stock. The preferred stock has a par value of $25 per share and it pays an annual dividend of $1.75 per share. What is its intrinsic value per share?
Intrinsic value = D/k = 1.75/0.078 = 22.44
Investors require a return of 12.9% per year to hold a stock. The stock's last dividend was $2.25 per share and the dividends are not expected to grow. What is the stock's intrinsic value per share?
Intrinsic value = D/k = 2.25/0.129 = 17.44
A stock's next dividend is expected to be $3.15 per share and the dividends are not expected to grow. If investors require a return of 13.7% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D/k = 3.15/0.137 = 22.99
Investors require a return of 11.4% per year to hold a stock. The stock's last dividend was $3.51 per share and the dividends are not expected to grow. What is the stock's intrinsic value per share?
Intrinsic value = D/k = 3.51/0.114 = 30.79
A perpetual preferred stock has a par value of $35 per share and the dividend rate is 6.75% per year. If investors require a return of 7.2% per year to hold the preferred stock, what is its intrinsic value per share?
Intrinsic value = D/k = 35(0.0675)/0.072 = 32.81
A stock's last dividend was $4.15 per share and the dividends are not expected to grow. If investors require a return of 15.3% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D/k = 4.15/0.153 = 27.12
A stock's next dividend is expected to be $4.52 per share and the dividends are not expected to grow. If investors require a return of 10.8% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D/k = 4.52/0.108 = 41.85
A perpetual preferred stock has a par intrinsic value of $50 per share and the dividend rate is 7.0% per year. If investors require a return of 9.5% per year to hold the preferred stock, what is its intrinsic value per share?
Intrinsic value = D/k = 50(0.07)/0.095 = 36.84
A perpetual preferred stock has a par value of $60 per share and the dividend rate is 6.5% per year. If investors require a return of 5.6% per year to hold the preferred stock, what is its intrinsic value per share?
Intrinsic value = D/k = 60(0.065)/0.056 = 69.64
A perpetual preferred stock has a par value of $120 per share and it pays an annual dividend of $7.50 per share. If investors require a return of 8.4% per year to hold the preferred stock, what is its intrinsic value per share?
Intrinsic value = D/k = 7.50/0.084 = 89.29
Investors require a return of 5.8% per year to hold a perpetual preferred stock. The preferred stock has a par value of $75 per share and the dividend rate is 6.5% per year. What is its intrinsic value per share?
Intrinsic value = D/k = 75(0.065)/0.058 = 84.05
A stock's next dividend is expected to be $1.18 per share and the dividends are expected to grow forever at a constant rate of 7.8% per year. If investors require a return of 14.9% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D1/(k - g) = 1.18/(0.149 - 0.078) = 16.62
A stock's last dividend was $1.25 per share and the dividends are expected to grow forever at a constant rate of 7.4% per year. If investors require a return of 13.3% per year to hold the stock, what is the stock's intrinsic value per share?
Intrinsic value = D1/(k - g) = 1.25(1.074)/(0.133 - 0.074) = 22.75
A stock's last dividend was $1.65 per share and the dividends are expected to grow forever at a constant rate of 4.6% per year. If investors require a return of 13.1% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D1/(k - g) = 1.65(1.046)/(0.131 - 0.046) = 20.30
A stock's last dividend was $1.75 per share and the dividends are expected to grow forever at a constant rate of 5.4% per year. If investors require a return of 11.3% per year to hold the stock, what is the stock's intrinsic value per share?
Intrinsic value = D1/(k - g) = 1.75(1.054)/(0.113 - 0.054) = 31.26
A stock's last dividend was $2.15 per share and the dividends are expected to grow forever at a constant rate of 6.4% per year. If investors require a return of 15.3% per year to hold the stock, what is the stock's intrinsic value per share?
Intrinsic value = D1/(k - g) = 2.15(1.064)/(0.153 - 0.064) = 25.70
Investors require a return of 10.8% per year to hold a stock. The stock's next dividend is expected to be $2.38 per share and the dividends are expected to grow forever at a constant rate of 5.8% per year. What is the stock's intrinsic value per share?
Intrinsic value = D1/(k - g) = 2.38/(0.108 - 0.058) = 47.60
Investors require a return of 14.3% per year to hold a stock. The stock's last dividend was $4.64 per share and the dividends are expected to grow forever at a constant rate of 6.1% per year. What is its intrinsic value per share?
Intrinsic value = D1/(k - g) = 4.64(1.061)/(0.143 - 0.061) = 60.04
A stock's next dividend is expected to be $4.86 per share and the dividends are expected to grow forever at a constant rate of 7.5% per year. If investors require a return of 16.5% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value = D1/(k - g) = 4.86/(0.165 - 0.075) = 54.00
A stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $1.00 per share in five years. After they begin, the dividends are expected to grow forever at a constant rate of 6.5% per year. If investors require a return of 11.4% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value in four years = D5/(k - g) = 1.00/(0.114 - 0.065) = 20.41 Intrinsic value today = 20.41/1.1144 = 13.25
A stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $2.00 per share in five years. After they begin, the dividends are expected to grow forever at a constant rate of 5.0% per year. If investors require a return of 10.0% per year to hold the stock, what is the stock's intrinsic value per share?
Intrinsic value in four years = D5/(k - g) = 2.00/(0.10 - 0.05) = 40.00 Intrinsic value today = 40.00/1.14 = 27.32
Investors require a return of 14.2% per year to hold a stock. The stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $1.15 per share in two years. After they begin, the dividends are expected to grow forever at a constant rate of 6.9% per year. What is the stock's intrinsic value per share?
Intrinsic value in one year = D2/(k - g) = 1.15/(0.142 - 0.069) = 15.75 Intrinsic value today = 15.75/1.142 = 13.79
A stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $4.10 per share in two years. After they begin, the dividends are expected to grow forever at a constant rate of 4.7% per year. If investors require a return of 10.2% per year to hold the stock, what is the stock's intrinsic value per share?
Intrinsic value in one year = D2/(k - g) = 4.10/(0.102 - 0.047) = 74.55 Intrinsic value today = 74.55/1.102 = 67.65
A stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $0.95 per share in four years. After they begin, the dividends are expected to grow forever at a constant rate of 6.2% per year. If investors require a return of 12.7% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value in three years = D4/(k - g) = 0.95/(0.127 - 0.062) = 14.62 Intrinsic value today = 14.62/1.1273 = 10.21
Investors require a return of 12.3% per year to hold a stock. The stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $1.15 per share in four years. After they begin, the dividends are expected to grow forever at a constant rate of 8.3% per year. What is its intrinsic value per share?
Intrinsic value in three years = D4/(k - g) = 1.15/(0.123 - 0.083) = 28.75 Intrinsic value today = 28.75/1.1233 = 20.30
A stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $0.55 per share in three years. After they begin, the dividends are expected to grow forever at a constant rate of 7.4% per year. If investors require a return of 11.7% per year to hold the stock, what is its intrinsic value per share?
Intrinsic value in two years = D3/(k - g) = 0.55/(0.117 - 0.074) = 12.79 Intrinsic value today = 12.79/1.1172 = 10.25
Investors require a return of 15.0% per year to hold a stock. The stock currently does not pay any dividends. The stock is expected to begin paying a dividend of $1.50 per share in three years. After they begin, the dividends are expected to grow forever at a constant rate of 7.0% per year. What is the stock's intrinsic value per share?
Intrinsic value in two years = D3/(k - g) = 1.50/(0.15 - 0.07) = 18.75 Intrinsic value today = 18.75/1.152 = 14.18
A perpetual preferred stock's par value is $25 per share and it pays an annual dividend of $1.75 per share. If its price is $27.54 per share, what annual return do investors require?
Required return = D/P = 1.75/27.54 = 0.064
A perpetual preferred stock's price is $84.78 per share. If its par value is $100 per share and the dividend rate is 5.0% per year, what annual return do investors require?
Required return = D/P = 100(0.05)/84.78 = 0.059
A perpetual preferred stock's price is $104.78 per share. If its par value is $100 per share and the dividend rate is 5.5% per year, what annual return do investors require?
Required return = D/P = 100(0.055)/104.78 = 0.053
A perpetual preferred stock has a par value of $120 per share and the dividend rate is 6.5% per year. If its price is $112.68 per share, what annual return do investors require?
Required return = D/P = 120(0.065)/112.68 = 0.069
A perpetual preferred stock's price is $38.48 per share. If its par value is $35 per share and the dividend rate is 7.5% per year, what annual return do investors require?
Required return = D/P = 35(0.075)/38.48 = 0.068
A perpetual preferred stock's price is $46.22 per share. If it has a par value of $50 per share and it pays an annual dividend of $4.25 per share, what annual return do investors require?
Required return = D/P = 4.25/46.22 = 0.092
A perpetual preferred stock's price is $56.78 per share. If its par value is $65 per share and it pays an annual dividend of $4.25 per share, what annual return do investors require?
Required return = D/P = 4.25/56.78 = 0.075
A perpetual preferred stock has a par value of $40 per share and the dividend rate is 4.75% per year. If its price is $42.32 per share, what annual return do investors require?
Required return = D/P = 40(0.0475)/42.32 = 0.0449
A perpetual preferred stock has a par value of $80 per share and the dividend rate is 6.0% per year. If its price is $77.68 per share, what annual return do investors require?
Required return = D/P = 80(0.06)/77.68 = 0.0618
A company's next dividend is expected to be $1.67 per share and the dividends are expected to grow forever at a constant rate of 7.2% per year. If the company's stock price currently is $21.87 per share, what is the stock's annual required return?
Required return = Dividend yield + growth rate = 1.67/21.87 + 0.072 = 0.148
A company's stock price currently is $34.43 per share. If the company's next dividend is expected to be $3.45 per share and the dividends are expected to grow forever at a constant rate of 5.3% per year, what is the stock's annual required return?
Required return = Dividend yield + growth rate = 3.45/34.43 + 0.053 = 0.153
A company's last dividend was $3.31 per share. If the company's dividend yield is 3.7% per year and the dividends are expected to grow forever at a constant rate of 10.2% per year, what is the stock's annual required return?
Required return = Dividend yield + growth rate = 3.7 + 10.2 = 13.9
A company's stock price currently is $66.37 per share. If the company's last dividend was $5.10 per share and the dividends are expected to grow forever at a constant rate of 5.1% per year, what is the stock's annual required return?
Required return = Dividend yield + growth rate = 5.10(1.051)/66.37 + 0.051 = 0.132
A company's next dividend is expected to be $4.18 per share. If the company's dividend yield is 6.3% per year and the dividends are expected to grow forever at a constant rate of 9.5% per year, what is the stock's annual required return?
Required return = Dividend yield + growth rate = 6.3 + 9.5 = 15.8
A company's stock price currently is $77.36 per share. If the company's dividend yield is 6.7% per year and the dividends are expected to grow forever at a constant rate of 8.4% per year, what is the stock's annual required return?
Required return = Dividend yield + growth rate = 6.7 + 8.4 = 15.1
A stock's next dividend is expected to be $1.48 per share and the dividends are expected to grow forever at a constant rate of 6.0% per year. The risk-free interest rate is 1.7% per year and the market risk premium is 5.1% per year. If the stock's beta is 1.27, what is its intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 1.7 + 1.27(5.1) = 8.18 Intrinsic value = D1/(k - g) = 1.48/(0.0818 - 0.06) = 67.89
The risk-free interest rate is 1.9% per year and the expected market return is 8.4% per year. A stock's next dividend is expected to be $2.06 per share and the dividends are expected to grow forever at a constant rate of 5.0% per year. If the stock's beta is 1.38, what is its intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 1.9 + 1.38(8.4 - 1.9) = 10.87 Intrinsic value = D1/(k - g) = 2.06/(0.1087 - 0.05) = 35.09
A stock's last dividend was $1.42 per share and the dividends are not expected to grow. The risk-free interest rate is 2.2% per year and the market risk premium is 5.1% per year. If the stock's beta is 1.29, what is the stock's intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 2.2 + 1.29(5.1) = 8.78 Intrinsic value = D/k = 1.42/0.0878 = 16.17
A stock's next dividend is expected to be $3.86 per share and the dividends are expected to grow forever at a constant rate of 3.8% per year. The risk-free interest rate is 3.6% per year and the expected market return is 9.8% per year. If the stock's beta is 0.71, what is the stock's intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 3.6 + 0.71(9.8 - 3.6) = 8.00 Intrinsic value = D1/(k - g) = 3.86/(0.080 - 0.038) = 91.90
The risk-free interest rate is 4.4% per year and the expected market return is 11.3% per year. A stock's last dividend was $1.27 per share and the dividends are expected to grow forever at a constant rate of 5.3% per year. If the stock's beta is 1.18, what is its intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 4.4 + 1.18(11.3 - 4.4) = 12.54 Intrinsic value = D1/(k - g) = 1.27(1.053)/(0.1254 - 0.053) = 18.47
The risk-free interest rate is 4.6% per year and the market risk premium is 5.2% per year. A stock's next dividend is expected to be $3.78 per share and the dividends are expected to grow forever at a constant rate of 4.3% per year. If the stock's beta is 1.34, what is its intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 4.6 + 1.34(5.2) = 11.57 Intrinsic value = D1/(k - g) = 3.78/(0.1157 - 0.043) = 51.99
A stock's last dividend was $0.76 per share and the dividends are expected to grow forever at a constant rate of 6.9% per year. The risk-free interest rate is 5.1% per year and the expected market return is 12.7% per year. If the stock's beta is 1.09, what is the stock's intrinsic value per share?
Required return = Risk-free rate + beta(market risk premium) = 5.1 + 1.09(12.7 - 5.1) = 13.38 Intrinsic value = D1/(k - g) = 0.76(1.069)/(0.1338 - 0.069) = 12.54
A company's weighted average cost of capital is 9.4% per year and the market intrinsic value of its debt is $75.9 million. The company's free cash flow next year is expected to be -$9.5 million and the following year it is expected to be $4.5 million. Thereafter, the free cash flow is expected to grow forever at a rate of 6.7% per year. If the company has four million shares of common stock outstanding, what is the intrinsic value per share?
Terminal intrinsic value as of year 1 = CF2/(WACC - g) = 4.5M/(0.094 - 0.067) = 166.7M Company intrinsic value = (-9.5M + 166.7M)/1.094 = 143.7M Equity intrinsic value = 143.7M - 75.9M = 67.8M Intrinsic value per share = 67.8M/4M = 16.95
A company's free cash flow next year is expected to be -$7.2 million, $1.6 million the following year, and $3.2 million in the third year. Thereafter, the free cash flow is expected to grow forever at a rate of 7.5% per year. The company's weighted average cost of capital is 10.1% per year and the market intrinsic value of its debt is $45.2 million. If the company has two million shares of common stock outstanding, what is the intrinsic value per share?
Terminal intrinsic value as of year 2 = CF3/(WACC - g) = 3.2M/(0.101 - 0.075) = 123.1M Company intrinsic value = -7.2M/1.101 + (1.6M + 123.1M)/1.1012 = 96.3M Equity intrinsic value = 96.3M - 45.2M = 51.1M Intrinsic value per share = 51.1M/2M = 25.55
