10 May IF A 15 PERCENT DISCOUNT RATE IS APPROPRIATE FOR THIS STOCK WHAT IS ITS VALUE?
Value of a Preferred StockA preferred stock from Duquesne Light Company (DQUPRA) pays $3.10 in annual dividends. If the required return on the preferred stock is 6.4 percent what’s the value of the stock?Dividend GrowthAnnual dividends of General Electric (GE) grew from $0.75 in 2001 to $1.12 in 2006. What was the annual growth rate?Expected ReturnPaychex Inc. (PAYX) recently paid a $0.90 dividend. The dividend is expected to grow at a 6 percent rate. At a current stock price of $40.11 what is the return shareholders are expecting?Dividend Initiation and Stock ValueA firm does not pay a dividend. It is expected to pay its first dividend of $0.35 per share in three years. This dividend will grow at 6 percent indefinitely. Using an 11.5 percent discount rate compute the value of this stock.Variable GrowthA fast growing firm recently paid a dividend of $0.25 per share. The dividend is expected to increase at a 15 percent rate for the next 4 years. Afterwards a more stable 6 percent growth rate can be assumed. If a 15 percent discount rate is appropriate for this stock what is its value?
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