Calculate the price with the constant dividend growth model

Assignment Help Financial Management
Reference no: EM131998028

Sisters Corp expects to earn $7 per share next year. The firm’s ROE is 15% and its plowback ratio is 50%. If the firm’s market capitalization rate is 10%.

a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.)

Price            $

b. Calculate the price with no growth.

Price            $

c. What is the present value of its growth opportunities? (Do not round intermediate calculations.)

PVGO            $

Reference no: EM131998028

Questions Cloud

How much should you be prepared to pay for the stock : If you require a return of 15% on your investment, how much should you be prepared to pay for the stock?
Could arbitrage opportunity limit profit making to investors : Could Arbitrage opportunity limit the profit making to investors/banks?
Find the bond investment value of this ?issue : Find the bond investment value of this ?issue, given that comparable nonconvertible bonds are currently selling to yield 9.16?%.
What is the intrinsic value of a share of xyrong stock : What is the intrinsic value of a share of Xyrong stock? What is your expected one-year holding-period return on Xyrong stock?
Calculate the price with the constant dividend growth model : Calculate the price with the constant dividend growth model. What is the present value of its growth opportunities?
Compare your firm beta to the industry average beta : Compare your firm's beta to the industry average beta.
Find the total return on this bond in us dollars : Now find the total return on this bond in U.S.dollars. Did currency exchange rates affect the return in any? way?
What is the intrinsic value of deployment specialists stock : If the required return for Deployment Specialists is 10.0%, what is the intrinsic value of Deployment Specialists stock?
Options contracts on stocks may : Options contracts on stocks may.

Reviews

Write a Review

Financial Management Questions & Answers

  Statement provide measure of firm cash flows

Why doesn't an income statement provide a measure of a firm's cash flows?

  Calculating costs of issuing debt home improvement

Calculating Costs of Issuing Debt Home Improvement, Inc. needs to raise $3.00 million to finance plant expansion. In discussions with its investment bank, Home Improvement learns that the bankers recommend a debt issue with a gross proceeds of $1,000..

  Equity can build up in a property by

A loan with negative amortization always leads to. Equity can build up in a property by.

  The pump will have no salvage value

Assume, after either scenario, nothing will be left and the pump will have no salvage value. Should you buy the pump? Why or Why Not?

  Calculating Project NPV

Calculating Project NPV [LO 2] Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,640,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, af..

  The firm earnings before interest and taxes

Brown Office Supplies recently reported $198,939 of sales, How much was the firm's earnings before interest and taxes (EBIT)?

  Variable growth version of the dividend valuation model

Assume you’ve generated the following information about the stock of Bufford’s Burger Barns: The company’s latest dividends of $4 a share are expected to grow to $4.32 next year, to $4.67 the year after that, and to $5.04 in three years. Use the vari..

  What portion of capital budget will be funded with debt

what portion of the capital budget will be funded with debt?

  What is the total cost savings can be realized

Company A, a low rated rm, desires a xed rate, long term loan. Company A currently has access to oating-rate funds at a margin of 1.2% over LIBOR. Its direct borrowing cost is 13% in the fixed rate bond market. What's the total cost savings can be re..

  Discuss the form and extent of remuneration disclosure

Discuss the form and extent of remuneration disclosure that applies to financial advisers.

  Does interest rate parity hold

Does Interest Rate Parity hold, and if not where would you borrow and where would you invest?

  Company to evaluate the proposed acquisition of new machine

You have been asked by the president of your company to evaluate the proposed acquisition of a new machine. What is the operating cash flow per year?

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