Calculate the price of the share at the end of year

Assignment Help Financial Accounting
Reference no: EM132936439

Question - Aspen Australia Pty Ltd is a fast-growing drug company. The company forecasts that in the next 3 years its growth rates will be 30 per cent, 28 per cent and 24 per cent, respectively. Last week it declared a dividend of $1.67. After 3 years, the company expects a more stable growth rate of 8 per cent for the next several years. The required rate of return is 14 per cent.

Required -

a. Calculate the dividends for the next 3 years, and find its present value.

b. Calculate the price of the share at the end of year 3, when the company settles to a constant growth rate.

c. What is the current price of the share?

Reference no: EM132936439

Questions Cloud

What is the measurement of the Lease Liability : Truefont incurs initial direct costs of $2,000. What is the measurement of the Lease Liability and the Right-of-Use Asset
What was balance in x investment in y account as of dec : On the date of acquisition, Y's net book value was $1,600,000, What was the balance in X's "Investment in Y' account as of December 31st,2020?
Define exactly what the prospective payment system is : Define exactly what the prospective payment system is. Is this a bad or good method for paying for healthcare services and list why it is bad or good
How should the investor account for cash dividends : How should the investor account for cash dividends received from the investee be shown? When an investor uses the equity method to account for investments.
Calculate the price of the share at the end of year : The required rate of return is 14 per cent. Calculate the price of the share at the end of year 3, when the company settles to a constant growth rate
What is second year depreciation expense on popcorn popper : The popper cost $5,000. What is the second year depreciation expense on the popcorn popper assuming straight line depreciation?
What is book value after the second year on popcorn popper : The expected life is 5 years with a salvage value. What is the book value after the second year on the popcorn popper assuming units of output depreciation?
What is the distribution of sampling means : The weight of Bramley cooking apples is distributed normally with a mean of 240 and a standard deviation of 80. What is the distribution of sampling means
What is the non-refundable portion : The Solo family files MFJ and their MAGI = $168,500 and would like to use the AOTC credit for tax purposes. What is the Non-Refundable portion

Reviews

Write a Review

Financial Accounting Questions & Answers

  Calculate the Payables Turnover ratio

The SOS Company has Current Assets of $1000, Current Liabilities of $600 and Accounts Payables of $300. Calculate the Payables Turnover ratio

  About the bank reconciliation

Rich Company's unadjusted book balance at October 31, 2014 is $5,750. The following information is available for the bank reconciliation. Outstanding checks, $1,400 Deposits in transit, $1,200 Bank service charges, $110 Bank collected an accounts rec..

  Make a production report for the department using the fifo

Stage of completion with respect to conversion. Work in process, beginning. Prepare a production report for the department using the FIFO method.

  How much advertising expense should be allocated

Advertising expense totaled $90,000 for the current year, and departmental sales were: How much advertising expense should be allocated to each department?

  Is accrual accounting more closely related to companys goal

Is accrual accounting more closely related to a company's goal of profitability or liquidity? Business application- Would you expect net income to be a good measure of a company's liquidity? Why or why not?

  What is the correctly valued offer price

What is the correctly valued offer price? How much cash will Zang raise net of the spread (use the rounded offer price)? Write out your answer completely.

  How did the quality payment program come about

What recommendations would you have for a physician who must choose from participating in MIPS or APM? How did the Quality Payment Program come about?

  Investigate and identify the administrative expense

With regards to possible new loan capital, the company is currently low geared and could certainly support new debt finance. It is, however, important to keep a watch on interest cover.

  How does investor report dividends received from investment

How does an investor report dividends received from an investment accounted for as a joint venture? What amount will B&B Company report

  Is a conflict between maximizing shareholder wealth

Explain the firm's position to shareholders asking why the company does not pay bribes when its foreign competitors in various nations clearly do so?

  What will be TapDance WACC

Suppose that TapDance, Inc.'s, capital structure features 65 percent equity, 35 percent debt, What will be TapDance WACC

  What will be net profit-loss per share on a long straddle

All options expire on December 21, 2021. What will be net profit/loss per share on a long straddle if the stock price is $10 per share

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!

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