Nine Point Industries recently paid its annual dividend of $4.42, and reported an ROE of 8%. The firm pays out 50% of its earnings as dividends. The stock has a beta of 1.62. The current risk-free rate is 3.45% and the market return is 18.00%. Assuming that CAPM holds, what is the intrinsic value of this stock? DO NOT ENTER THE $ SIGN. ALSO, ENTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e. IF YOUR ANSWER IS 33.4343 ENTER IT AS 33.43 ONLY

Nine Point Industries recently paid its annual dividend of $4.42, and reported an ROE of 8%. The firm pays out 50% of its earnings as dividends. The stock has a beta of 1.62. The current risk-free rate is 3.45% and the market return is 18.00%. Assuming that CAPM holds, what is the intrinsic value of this stock? DO NOT ENTER THE $ SIGN. ALSO, ENTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e. IF YOUR ANSWER IS 33.4343 ENTER IT AS 33.43 ONLY

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $58. A. What are the dividend yield and percentage capital gain? B. Now suppose the year-end stock price after the dividend is paid is $42. What are the dividend yield and percentage capital gain in this case? (Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.)
Analogue Technology has preferred stock outstanding that pays a $18.80 annual dividend. It has a price of $204. What is the required rate of return (yield) on the preferred stock? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Your broker has recommended that you purchase stock in Beacan, Inc. Beacan recently paid its annual dividend ($7.00). Dividends have consistently grown at a rate of 2.50%. Analysts estimate that the stock has a beta of 1.42. The current risk-free rate is 2.80% and the market risk premium (RM - RF) is 6.50%. Assuming that CAPM holds, what is the intrinsic value of this stock?
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1. An analyst estimates that a stock will pay a $1 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 14%, what is the value of the stock? A. $34.60. B. $35.52. C. $35.96. Please provide an accurte answer.
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