FINA 301 Aassignment 5 PDF

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Assignment #5 Mohamad El Yamak 17700846 Question #2: R= D/P +g R= $2.30/39.85 + 0.045 =0.057716 + 0.045 =0.102716

Question #3: Given information: The next dividend, D1 is $2.45 The dividend is expected to grow is 5.5 percent The stock is currently trading at $48.50 per share The dividend yield is the next dividend i.e. D1 dividend by the current stock price. Dividend yield = dividend / current price = $2.45 / $48.50 Dividend yield = 5.05% The capital gains yield is the same as the dividend growth rate, which is Capital gains yield = 5.5%

Question #6: Dividend yield = 11.5% / 2 = 5.57% Capital gain yield = 11.5% / 2 = 5.75% D1 = price per share * dividend yield =$67 * 0.0575 = $3.85 D1 = D0 * (1 + 0.0575) $3.85 = D0 * (1.0575) D0 = $3.85 / 1.0575 = $3.64 The current dividend per share for the company would be 3.64%

Question #16: The dividend for next year will increase by $5 in every year for four years therefore the dividends for four years would be as under: D1= ($3+$5) = $8 D2=($8+$5) = $13 D3= ($13+$5) = $18 D4=($18+$5) = $23 P0= D1/(1+R)1 + D2/(1+R)2 + D3/(1/R)3 + D4/(1+R)4 ={ [8/(1+0.104)1 ]+ [13/(1+0.104)2 ]+ [ 18/(1+0.104)3 ]+ [23/(1+0.104)4] } = ($7.25 + $10.67 + $13.38 + $15.48) =$46.78 The current stock price of the company is $46.78

Question #19: current price=(dividends next period/(required return-growth rate) =(16.3*(1-0.045)/(0.12-(-0.045)) =15.5665/0.165 =$94.34(Approximately)...