FTHC Ltd has forecast earnings per share in a year’s time of $2.50. FTHC Ltd has a policy of distributing 70% of earnings as an annual dividend. You forecast that dividends are expected to grow at a constant rate of 6% per annum each year following the dividend next year. If the required return from FTHC Ltd shares is 15% per annum, which of the following is closest to the present value of FTHC Ltd’s growth opportunities (measured on a per share basis)? (a) $2.78 (b) $4.50 (c) $19.44 (d) $27.00

DFB, Inc., expects earnings at the end of this year of $4.19 per share, and it plans to pay a $2.43 dividend at that time. DFB will retain $1.76 per share of its earnings to reinvest in new projects with an expected return of 15% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. a. What growth rate of earnings would you forecast for DFB? b. If DFB’s equity cost of capital is 12.2%, what price would you estimate for DFB stock today? c. Suppose DFB instead paid a dividend of $3.43 per share at the end of this year and retained only $0.76 per share in earnings. If DFB maintains this higher payout rate in the future, what stock price would you estimate now? Should DFB raise its dividend?

PIN Ltd is a firm that has been underperforming for many years and has just had a change in management. The new management team have just made an announcement that they expect to start paying an annual dividend 4 years from today, and they expect that after the initial dividend of $4 it will grow at a constant rate of 6% per annum. The required rate of return for PIN Ltd shares is 14% per annum. Which of the following is closest to the value of PIN Ltd shares? (a) $18.41 (b) $21.36 (c) $29.60 (d) $33.75

company recently paid an annual dividend of $10. Starting next year, it will implement a 5% yearly dividend growth policy. Investors require a 12% return. The value of this stock in 4 years can be calculated as follows:

A company just paid an annual dividend of €1.25 per share. If the required annual rate of return is 14% and dividends are expected to grow indefinitely at a constant rate of 8%, the company’s intrinsic value per share is closest to:A.€16.88.B.€20.83.C.€22.50.

A company is currently running at a loss, but A expected to report EPS of 10 cents and payout 50% of earnings as a dividend in 2 years. Once profitable, earnings and dividend will grow at 15% for 5 years (year 3-7). From year 8, growth will slow to 4%. If A’s required return is 20%. What are A shares worth today?