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If? Pepperdine, Inc

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If? Pepperdine, Inc.'s return on equity is 19 percent and the management plans to retain 64 percent of earnings for investment? purposes, what will be the? firm's growth? rate?

 

Header? Motor, Inc., paid a $2.96 dividend last year. At a constant growth rate of 7 percent, what is the value of the common stock if the investors require a 13 percent rate of? return?

 

Given that a? firm's return on equity is 19 percent and management plans to retain 41 percent of earnings for investment? purposes, what will be the? firm's growth? rate? If the firm decides to increase its retention? rate, what will happen to the value of its common? stock?

 

Wayne, Inc.'s outstanding common stock is currently selling in the market for ?$18. Dividends of ?$2.21 per share were paid last? year, return on equity is 19 ?percent, and its retention rate is 28 percent.  What is the value of the stock to? you, given a required rate of return of 17 ?percent? Should you purchase this? stock?

 

Solarpower Systems earned $20 per share at the beginning of the year and paid out ?$10 in dividends to shareholders? (so, D0=$10?) and retained $10 to invest in new projects with an expected return on equity of 21 percent. In the? future, Solarpower expects to retain the same dividend payout? ratio, expects to earn a return of 21 percent on its equity invested in new? projects, and will not be changing the number of shares of common stock outstanding. 

Calculate the future growth rate for? Solarpower's earnings. If the? investor's required rate of return for? Solarpower's stock is

13 percent?, what would be the price of? Solarpower's common? stock? What would happen to the price of? Solarpower's common stock if it raised its dividends to $13 and then continued with that same dividend payout ratio? permanently? Should Solarpower make this? change? ? (Assume that the? investor's required rate of return remains at 13 percent?.) What would happened to the price of? Solarpower's common stock if it lowered its dividends to ?$4 and then continued with that same dividend payout ratio? permanently? Does the constant dividend growth rate model work in this? case? Why or why? not? ? (Assume that the? investor's required rate of return remains at 13 percent and that all future new projects will earn 21 ?percent.)

 

the? investor's required rate of return is 12 percent, the expected level of earnings at the end of this year ?(E1?) is ?$12?, the retention ratio is 30 ?percent, the return on equity ?(ROE?) is 13 percent? (that is, it can earn 13 percent on reinvested? earnings), and similar shares of stock sell at multiples of 8.642 times earnings per share. Determine the expected growth rate for dividends. Determine the price earnings ratio ?(P?/E1?). What is the stock price using the ?P/E ratio valuation? method? What is the stock price using the dividend discount? model? What would happen to the ?P/E ratio ?(P?/E1?) and stock price if the company increased its retention rate to 80 percent? (holding all else? constant)? What would happen to the ?P/E ratio ?(P?/E1?) and stock price if the company paid out all its earnings in the form of? dividends? What have you learned about the relationship between the retention rate and the ?P/E? ratios? 

 

Calculate the value of a preferred stock that pays a dividend of ?$8.00 per share when the? market's required yield on similar shares is 13 percent.

 

Pioneer's preferred stock is selling for ?$26 in the market and pays a ?$3.90 annual dividend. If the? market's required yield is

13 ?percent, what is the value of the stock for that? investor? Should the investor acquire the? stock? 

 

What is the value of a preferred stock where the dividend rate is 14 percent on a ?$100 par? value, and the? market's required yield on similar shares is 13 ?percent?

 

Kendra? Corporation's preferred shares are trading for $52 in the market and pay a $6.70 annual dividend. Assume that the? market's required yield is 14 percent. What is the? stock's value to? you, the? investor? Should you purchase the? stock?