# Need Finance help with stock prices and dividends

Nov 18th, 2015
HelloWorld
Category:
Price: \$20 USD

Question description

Use the following information for questions 1 through 4:
The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.

Goodman Industries                                            Landry Incorporated                                              Market Index
Year      Stock Price           Dividend          Stock Price            Dividend                                Includes Dividends
2013          \$25.88                  \$1.73           \$73.13                 \$4.50                                       17495.97
2012            22.13                   1.59             78.45                   4.35                                         13178.55
2011             24.75                   1.50            73.13                  4.13                                         13019.97
2010            16.13                    1.43             85.88                 3.75                                         9651.05
2009            17.06                    1.35            90.00                   3.38                                        8403.42
2008             11.44                   1.28             83.63                   3.00                                       7058.96

1. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns for the two stocks and the index. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and then dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2008 because you do not have 2007 data.)

2. Calculate the standard deviations of the returns for Goodman, Landry, and the Market Index. (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.)

3. What dividends do you expect for Goodman Industries stock over the next 3 years if you expect the dividend to grow at the rate of 5% per year for the next 3 years? In other words, calculate D1, D2, and D3. Note that D0 = \$1.50.

4. Assume that Goodman Industries’ stock has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for 3 years, and then sell it for \$27.05, what is the most you should pay for it?

(Top Tutor) Daniel C.
(997)
School: University of Maryland

Studypool has helped 1,244,100 students

## Review from our student for this Answer

FratBro23
Nov 19th, 2015
"Thank you, Thank you, for top quality work, this is your guy!!"

1831 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors