Common stock has current market price

Assignment Help Financial Management
Reference no: EM131073330

ABC, Inc., common stock has a current market price of $52 per share. Dividends have been $5 a share for several years and are expected to remain at that level for the foreseeable future. Other companies of similar risk and characteristics yield 10% in the marketplace. What should you recommend concerning ABC stock? Question 5 options: a) It should be purchased at $52 per share, because that is a fair price. b) It should be purchased at $52 per share, because it will yield 10.1%. c) It should not be purchased, because it will yield only 2%. d) It should not be purchased at more than $50 per share.

Reference no: EM131073330

Questions Cloud

Bit of drawing in association towards : 1. Produce a couple of unmistakable difficulties get experienced to moving key security get prepared, and understand whether there are any parallels between your get-together. 2. Examine distinctive techniques you have utilized as a bit of drawing..
What is the current expected market rate of return : What is the current expected market rate of return (based on your regression)? Explain how to interpret your regression, including what the slope and y-intercept mean in terms we have used in this class.
What is the present value of this stream of cash flows : The state lottery's million-dollar payout provides for $1.1 million to be paid in 20 installments of S55.000 per payment. The first 555,000 payment is made immediately, and the 19 remaining S55,000 payments occur at the end of each of the next 19 yea..
Determining the unmistakable challenges : Produce a few unmistakable challenges get experienced to propelling principal security get ready, and make sense of whether there are any parallels between your social event.
Common stock has current market price : ABC, Inc., common stock has a current market price of $52 per share. Dividends have been $5 a share for several years and are expected to remain at that level for the foreseeable future. Other companies of similar risk and characteristics yield 10% i..
Critical awareness of the concept of decision support : CISM02 Critical awareness of the concept of decision support and its effects on all parts of an organisation - critical understanding of modelling and simulation
Prepare a summary of your recommendations for the owner : Considering the guidelines for employers under the Occupational Safety and Health Act of 1970, what do you feel will be important to include in your recommendations, and why?
Treasury inflation protected security time inflation : Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. Principal and Interest Payments for a Treasury Inflation Protected Security Time Inflation in Year Just Ended Par Value C..
Difference relevant to financial decision making : How does net cash flow differ from net income and why is that difference relevant to financial decision making?

Reviews

Write a Review

Financial Management Questions & Answers

  Find the three-year forward price for the stock

A stock is currently selling for $50 a share. The stock is not expected to pay any dividends over the next 3 years. The annual risk-free rate with continuous compounding is 5%. Find the three-year forward price for the stock.

  Two bond issues outstanding

Crawford Inc. has two bond issues outstanding, both paying the same annual interest of $55, called Series A and Series B. Series A has a maturity of 12 years, whereas Series B has a maturity of 1 year. What would the value of each of these bond when ..

  Bond transactions on your statement of cash flows

For this discussion, assume the role of a business owner who has to make a decision to raise additional capital. What considerations would you evaluate relative to issuing bonds as compared with conventional financing methods? How would you reflect t..

  Chance of doubling your investment

A project has a 0.72 chance of doubling your investment in a year and a 0.28 chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?

  What is the current market value of the stock

Test Sales, Inc. (TSI) just paid a common stock dividend of $2.50 per share. Its sales are expected to grow at a rate of 20% for the years 1 to 3, at 16% for years 4 and 5, and at 6% per year indefinitely thereafter. Dividend growth is expected to ma..

  About the net appliance sales

Luisa Gomes works for Southeast Appliance Mart. She receives a biweekly salary of $1,200 for which she must sell $15,000 worth of appliances. She also receives a commission of 3% on net sales above $15,000. What will be Luisa's pay for two weeks when..

  Two important types of international bonds

Any bond sold outside the country of the borrower is called an international bond. Foreign bonds and Eurobonds are two important types of international bonds. Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the c..

  Plant-equipment will be depreciated straight-line to zero

Consider a project to supply 110 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $2,000,000 five years ago; if the land were sold today, it would net you $2,200,0..

  What is value of their stock when required rate of return

Value a Constant Growth Stock Financial analysts forecast Best Buy Company (BBY) growth for the future to be 15.00 percent. Their recent dividend was $1.29. What is the value of their stock when the required rate of return is 16.13 percent?

  Find the internal rate of return for series of cash flows

Find the internal rate of return for the following series of cash flows. The initial outlay is $670,560.

  The firm uses bonds rather than a term loan

What effect do you think each of the following items should have on the interest rate that a firm must pay on a new issue of long-term debt? Indicate whether each factor would tend to raise, lower, or have an indeterminate effect on the interest rate..

  Proceeds are used to repurchase outstanding stock

An unlevered firm with a market value of $1 million has $50,000 shares outstanding. The firm restructures itself by issuing 200 new bonds with an 8% coupon. Proceeds are used to repurchase outstanding stock. Ignoring taxes, what is the break even EBI..

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