Finance Assignment
1. Dapper Wrapper Coat Corporation is currently expected to grow by 15% for each of the next three years due to their superior cable television system. However, thereafter growth is expected to level o! to 8% annually. DWC just paid a dividend of $.75. Investors in the system have a required rate of return of 12%. What is the value of DWC stock?
2.The Blizzard Wizard Snow Plows Corporation has been experiencing some tough times lately. They predict that their growth rate will decline 10% for the next two years, then decline further by 5% in the following two years. After that, the owners are encouraged that their new product line will enhance the bottom line and growth will expand to 16% for two years and then level o! to 5% for the foreseeable future.
Investors have a required rate of return of 15% and the last dividend paid was $1.15. What would an investor be willing to pay for BWSP Corp. stock?
3. Frocks & Socks Clothiers has fallen on hard times. Its management expects to pay no dividends for the next two years. However, in the third year expected dividends will be $1.35 and it is expected to grow at a rate of 4% in the 4th year, 8% in the 5th year, and 12% in the 6th year and thereafter. If the required return for Frocks Corporation is 20%, what would be the price of the stock today?
4.Free Press Magazine Inc., is experiencing a slump. Their dividends are expected to decline at a rate of 10% for three years. After that, with the new terminal, FP expects dividends to increase at a constant rate of 8% for the foreseeable future. FP just paid dividend of $1.75. Investors in FP have a required return of 12%. What would an investor be willing to pay for FP stock?
5.Listed below are the dividends paid for Waterproof Roof Manufacturing Stock. Although the company had a bad stretch of earnings several years ago, management believes that they are on a course that will maintain their current rate of growth. Investors require a 18% return on this company's stock. Waterproof stock sells for $42.75 per share. Would you pay $42.75 for the stock and if not, what would be a fair price for Waterproof?
YearDividends
2014$1.75
2013 1.73
2012 1.70
2011 1.68
2010 1.65
2009 1.60
2008 1.58
6. What would be a fair price for Gold Mind Memory Techniques, Inc., if the dividends earned are as listed below? Gold Mind stock has a rate of return of 14%.
YearDividends
2014 $ 1.90
2013 1.85
2012 1.80
2011 1.76
7. How much should a share of Up and Coming Preferred stock sell for if it currently has a dividend of $115 and it provides a return of 12%?