Homework answers / question archive / Assuming that the constant growth rate dividend discount model can be applied,work out the rate at which the dividends of the following firms are expected to grow:(4 points each for a total of 12 points)(a)

Assuming that the constant growth rate dividend discount model can be applied,work out the rate at which the dividends of the following firms are expected to grow:(4 points each for a total of 12 points)(a)

Finance

Share With

Assuming that the constant growth rate dividend discount model can be applied,work out the rate at which the dividends of the following firms are expected to grow:(4 points each for a total of 12 points)(a).XYZ Inc. pays out 20% of its earnings as dividends, has a "forward-looking" P/R ratio [current price to next twelve months' revenues] of 3.2, a profit margin of 20%, and a market capitalization rate of 15% per year, and(b).PQR Inc. generates 25 cents on every dollar of the book value of equity,has a price to book ratio of 2, and a market capitalization rate of 20% per year.(c). ABC Corp. has a profit margin (earnings over revenues) of 15%, Asset Turnover of 1.8 (ratio of the book value of the Assets at t=0 to the revenues between t=0 and t=1), leverage of 1.5 (ratio of the book value of assets to the book value of equity), and a retention ratio of 16%.