Finance

Culver Mechanical Inc.’s first dividend of $3.1 per share is expected to be paid six years from today. From then on, dividends will grow by 10 percent per year for five years. After five years, the growth rate will then slow to 5 percent per year in perpetuity. Assume that Culver’s required rate of return is 13 percent. What is the price of a share of Culver Mechanical today?Kingbird Inc. stock is expected to sell for $15 per share four years from now. Kingbird has just paid a dividend of 50 cents per share. Dividends are expected to grow at a rate of 5 percent per year for the next four years. Assume that the required rate of return for Kingbird stock is 15 percent.

What is the expected constant growth rate beginning in year 5?

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What will the price of Kingbird stock be five years from now?

What is Kingbird’s current stock price?

Waterway Inc. has a patent that will expire in two years. The firm is expected to grow at 9.5 percent for the next two years and dividends will be paid at year end. It just paid a dividend of $1. After two years, the growth rate will decline to 3.5 percent immediately, and the firm will grow at this rate forever. If the required rate of return is 10 percent, value the firm’s current share price. Sunland Foods Inc.’s current dividend is $4.70. Dividends are expected to decline by 4 percent per year for the next three years, and then remain constant thereafter. The required rate of return for this type of company is 13 percent.

What is the current stock price for Sunland Foods?

Calculate the market price of a preferred share assuming a quarterly dividend of $28 given the below annual market rates: 8%Ivanhoe Corporation’s common shares are trading at $21 per share and paid a dividend (Do) of $1.20 per share last year. The growth rate is expected to increase from 3% to 5%. Calculate Ivanhoe’s required return on common shares.

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