User Account

All Pages

Calculate the current stock price

Assignment Help Finance Basics
Reference no: EM13504105

Question 1. Dividend Growth Model with CAPM

Part (a)

Assume that the long-term growth rate (g) is 2% and the dividend next year (D1) is $90 per share. Also, assume that Riskfree rate (Rf) = 4%, Expected market return (Rm) = 10%, and Beta of the stock = 0.85. Calculate the current stock price (P0) using Dividend Growth/Discount Model (DGM or DDM). Show your steps and calculations as clear as possible.

Part (b)

Assume that the long-term growth rate (g) is 3% and the dividend next year (D1) is $60 per share. Also, assume that Riskfree rate (Rf) = 4%, Expected market return (Rm) = 10%, and Beta of the stock = 1.85. Calculate the current stock price (P0) using Dividend Growth/Discount Model (DGM or DDM). Show your steps and calculations as clear as possible.

Reference no: EM13504105

Questions Cloud

How fast did the starship travel : In a science fiction novel, a starship takes three days to travel between two distant space stations according to its own clocks. How fast did the starship travel, relative to the space station
The standard hotelling model of exhaustible resource pricin : In the standard Hotelling model of exhaustible resource pricing
Explain what concentration of nh3 is needed to lower : What concentration of NH3 is needed to lower the Cu2+(aq) to 6.4 x 10-14M in a solution that was originally 1.43 x 10-4 M in Cu2+(aq)
Implication for the efficiency of the organization : If a new accounting standard impact on profits, should this impact on the value of the firm, and if so, why and will the imposition of a particular accounting method have implication for the efficiency of the organization?
Calculate the current stock price : Assume that the long-term growth rate (g) is 2% and the dividend next year (D1) is $90 per share. Also, assume that Riskfree rate (Rf) = 4%, Expected market return
Explain cyclopropane (c3h6) reacts to form propene : Cyclopropane (C3H6) reacts to form propene (C3H6) in the gas phase. The reaction is first order in cylclopropane and has a rate constant of 5.87*10^-4/s at 485 C.
Describe how companies are dealing with the problem : When deciding to implement a capital investment decision, funding through acquiring debt must be obtained. Recently the credit market has been tight to non-existent.
Explain the rationale and limitations for the application : Explain the rationale and limitations for the application of the Normal Distribution as an approximation for other types of probability distributions
Explain the synthesis of acetanilide from aniline : Write the balanced equation for the reaction involved in the synthesis of acetanilide from aniline and acetic anhydride.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd