Best writers. Best papers. Let professionals take care of your academic papers

Order a similar paper and get 15% discount on your first order with us
Use the following coupon "FIRST15"
ORDER NOW

Ecology Labs Inc

/in /by

Question

Ecology Labs Inc. will pay a dividend of $3.75 per share in the next 12 months (D1). The

required rate of return (Ke) is 16 percent and the constant growth rate is 6 percent. (Each question is independent of the others.)   

a. Compute the price of Ecology Labs’ common stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. Assume Ke, the required rate of return, goes up to 19 percent. What will be the new price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Assume the growth rate (g) goes up to 10 percent. What will be the new price? Ke goes back to its original value of 16 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. Assume D1 is $5.00. What will be the new price? Assume Ke is at its original value of 16 percent and g goes back to its original value of 6 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"