Calculate the market capitalization rate

Assignment Help Financial Management

Reference no: EM13917626

Miltmar Corporation will pay a year-end dividend of $3, and dividends thereafter are expected to grow at the constant rate of 4% per year. The risk-free rate is 5%, and the expected return on the market portfolio is 14%. The stock has a beta of 0.82.

a. Calculate the market capitalization rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Market capitalization rate %

b. What is the intrinsic value of the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value $

Reference no: EM13917626

Questions Cloud

What is the combined present value of these cash flows : You are scheduled to receive a $480 cash flow in one year, a $780 cash flow in two years, and pay a $380 payment in three years. If interest rates are 9 percent per year, what is the combined present value of these cash flows?

Determine whether or not changes in the cost of capital : Analyze the reasons why the short-term project that you have chosen might be ranked higher under the NPV criterion if the cost of capital is high, while the long-term project might be deemed better if the cost of capital is low. Determine whether or ..

Investor who requires an 8 percent rate of return : ElVonn, Inc., a decorative firsm issued a $1,000 bond with a coupon rate of 8 percent and 20 years to maturity five years ago. If this bond pays interest semiannually, what is the value of this bond (today) to an investor who requires an 8 percent ra..

What is the cost of external equity if its stock : A current dividend of $1.80. Dividends are expected to grow at a rate of 7 percent a year into the foreseeable future. What's the cost of external equity if its stock can be sold to net $46 a share?

Calculate the market capitalization rate : Miltmar Corporation will pay a year-end dividend of $3, and dividends thereafter are expected to grow at the constant rate of 4% per year. The risk-free rate is 5%, and the expected return on the market portfolio is 14%. The stock has a beta of 0.82...

The required rate of return on the market : The risk-free rate of return is 6%, the required rate of return on the market is 12%, and High-Flyer stock has a beta coefficient of 1.7. If the dividend per share expected during the coming year, D1, is $2.80 and g = 5%, at what price should a share..

What would be the annual interest rate : Rip off loan company charges 8.25 percent interest for a two-week period. What would be the annual interest rate from that company?

Projects unit sales for new seven-octave voice emulation : Aguilera Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows: What is the profitability index for the set of cash flows if the relevant discount rate is 23 percent?

What will be the amount of capital gains tax on investment : Samuel Jenkins made an investment, 13 months ago. He just sold the investment and has a capital gain of $12,000. If Samuel is in the 28 percent tax bracket, what will be the amount of capital gains tax on the investment? (Hint, how are long-term capi..

User Account

All Pages