Ask Question
BusinessBusiness
10 February, 13:23

Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.50% per year. If the required return (r s) on SCI's stock is 16.25%, then the intrinsic value of SCI's shares is

+2
Answers (1)
  1. 10 February, 16:02
    0
    Intrinsic Value = $33.23

    Explanation:

    The intrinsic value of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.

    This model is represented as follows

    D (1+g) / (r-g) = P

    Price, D - dividend payable in now, ke - required rate of return, g - growth rate

    D - 3.12, g-6.50% r-6.25%

    Intrinsic value = (3.12 * 1.065) / (0.1625-0.065) = $33.228

    Intrinsic Value = $33.23
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
The first question you ask is: "gearup has several offices located around the country. what kinds of networks will gearup need to implement and/or support in this scenario
Answers (1)
A movie theater substantially decreases the price of its soda during the same week that a heavily advertised new movie is being released to theaters.
Answers (1)
There are a number of detergents marketed under the Tide brand including detergent with and without fabric softener, with and without bleach, with various pleasing smells, and fragrance-free.
Answers (1)
An accumulated depreciation account has a normal credit balance. increases on the debit side. is a contra-liability account. is offset against total assets on the balance sheet.
Answers (1)
At the beginning of 2019, a corporation had assets of $270,000 and liabilities of $160,000. During 2019, assets increase $25,000 and liabilities increase $5,000. What was stockholders' equity on December 31, 2019?
Answers (1)
New Questions in Business
Checking a diversified company's business portfolio for the competitive advantage potential of cross-business strategic fits does not involve determining whether sister business units have value chain match-ups that offer opportunities to 1.
Answers (1)
The project manager is a systems analyst with a diverse set of skills-management, leadership, technical, conflict management, and customer relationship-who is responsible for initiating, planning, executing, and closing down a project A. True B.
Answers (2)
A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000.
Answers (1)
Sally works at All About Tires. Sally's boss tells her that the new tires they received in the store will last for 60,000 miles and are effective in the snow. Sally is a new employee and does not know much about tires herself.
Answers (1)
You visit the local convenience store looking for a refreshing drink on a pleasant day. you know that you want a new type of cola beverage you've heard advertised on the radio, and reach into the refrigerator for what you think is the caffeine-free
Answers (1)
Home » Business » Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.50% per year. If the required return (r s) on SCI's stock is 16.
Sign Up Forgot Password?