Obama and Biden International just announced it will be paying an annual dividend of $0.90 a share plus an extra dividend of $0.30 a share this year. The company also announced that its regular dividend, which is all it anticipates paying after this year, will increase by 4.5% annually. What is the anticipated dividend per share next year?

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Hubert KochLv2

18 Jun 2018

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Diets For You announced today that it will begin paying annual dividends next year. The first dividend will be $0.12 a share. The following dividends will be $0.15, $0.20, $0.50, and $0.75 a share annually for the following 4 years, respectively. After that, dividends are projected to increase by 4 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 8.5 percent?

You are looking into a company that has never paid a dividend. They have just announced that they will be paying a one-time dividend of $20 per share in two years. They estimate after that that they will be paying a dividend in year 4 of $2.00 and that they will increase that dividend payout by 15% per year for next 4 years and then increase the dividend by 5% each year for the foreseeable future after that. If the risk free rate is 2.80%, the risk premium on the market is 6.0% and the companyâs beta is 1.1.

1. What is the value of the stock today?

2. What will the value of the stock right after they pay the $20 per share dividend?

Sander's Supplies has paid a constant dividend of $2.15 a share for the past 20 years. Yesterday, the firm announced that the dividend will increase next year by 5 percent and will stay at the level for three years, after which time the dividends will increase by 4 percent annually. The required return on this stock is 9 percent. What is the current value per share? Show your calculations.

A)$43.49
B)$56.42
C)$54.07
D)$41.97
E)$48.82

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