Calculate price of the stock

Reference no: EM1366471

The stock of Robotic Atlanta Corporation is trading at $40 each share. In the past, the firm has paid a constant dividend of $5 each share and it has just paid an yearly dividend. However, the company will announce today new investments that the market does not know about. It is expected that with these new investments, the dividends will grow at 5% forever. Assuming that the discount rate remains the same, what will be the price of the stock after the announcement?

Reference no: EM1366471

Questions Cloud

Calculating total amount of interest : Suppose you purchased a new Lan Rover for $67,000 on October 31, 1999. The down payment was $15,000. A bank financed the remaining balance at 12% interest rate for sixty months with monthly payments.

Using financial calculator to solve financial problems : Suppose your younger sister will start college in 5-years. She has just informed your parents that she wishes to go to Harvard University, which will cost $18,000 every year for four years

Disadvantages-forming strategic alliance : Describe the issues, challenges, or disadvantages to forming the strategic alliance (focus on supply chain). Provide an example that is not included in attached reference.

E-business environment and marketing system : Discuss the potential risks of using Web 2.0 tools. Provide several examples. What are the benefits of "build-to order" to buyers and sellers? Are there any disadvantages?

Calculate price of the stock : The stock of Robotic Atlanta Corporation is trading at $40 each share. In the past, the firm has paid a constant dividend of $5 each share and it has just paid an yearly dividend.

Demand curve and price equilibrium : Describe how each of the following will affect the price and quantity of equilibrium. To find out the new values, describe how the supply and/or demand curves will shift in the following cases (if at all).

Calculate future value of common stock : The last dividend paid by Klein Corporation was $2. Klein's growth rate is expected to be a constant 5 percent for next three years, after which dividends are expected to increase at a rate of 10%.

Internal controls programs : Explain the importance of INTERAL CONTROLS programs and identify effective INTERNAL CONTROL TECHNIQUES?

Schedule of demand and supply : Graph the demand and supply curves. What is the equilibrium price and quantity in this market and if the actual price in this market were above the equilibrium price, what would drive market toward the equilibrium?

User Account

All Pages