Compute the current price of the stock

Assignment Help Financial Management
Reference no: EM132029610

Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0 = 4.00). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1 = .20) and at a rate of 10 percent the following year (that is, g2 = .10). Thereafter (i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Robotic Atlanta stock is 8 percent, compute the current price of the stock. (Round your answer to 2 decimal places and record your answer without dollar sign or commas).

Reference no: EM132029610

Questions Cloud

What is a noise trader and are noise traders good or bad : What is a noise trader and are noise traders good or bad for investors trying to beat the market?
What is the new price of the three-year bonds : What is the new price of the 3-year bonds? Which one of these bonds is more sensitive to a change in interest rates?
Determine whether this project should be accepted : Calculate the internal rate of return on this project ? Determine whether this project should be accepted?
What is the current yield to maturity for these bonds : The bonds are currently selling at par value. What is the current yield to maturity for these bonds?
Compute the current price of the stock : Assuming the required rate of return on Robotic Atlanta stock is 8 percent, compute the current price of the stock.
What factors led them to become advocates : Describe what you believe to be the drivers for each of the individuals? What factors led them to become advocates? Discuss the challenges that each of them.
Define spoliation : Compare and contrast when evidence should be secured in place and when it should be removed from the scene.
What were 3 evolutionary challenges plants : What were 3 evolutionary challenges plants had when they were moving to land?
Post a description of the algorithm : Post a description of the algorithm that you think would best monitor the disease/condition you selected. Explain which covariates you would include.

Reviews

Write a Review

Financial Management Questions & Answers

  New town instruments is analyzing proposed project

New Town Instruments is analyzing a proposed project. The company expects to sell 2,100 inits, + or - 4 percent. The expected variable cost per unit is $270 and the expected fixed costs are $548,000. Cost estimates are considered accurate within a pl..

  Firms fall behind in their preferred dividend payments

Sometimes firms fall behind in their preferred dividend payments. some have argued that firms have an incentive to delay paying preferred dividends.

  Delta corporation bond pays annual coupon rate

Delta Corporation bond pays an annual coupon rate of 7% with 4 years remaining until maturity.

  These payments worth to you when you first start college

At a 6 percent discount rate, what are these payments worth to you when you first start college?

  Incorporation acquire corporate status

A company, may upon incorporation acquire a corporate status. it can thus sue and be sued in its own name. members and their properties are separate and independent of the company. with the aid of decided cases, examine the above statement.

  Find the financial break-even quantity

Consider a project with the following data: accounting break-even quantity = 5,400 units; cash break-even quantity = 5,000 units; life = five years; fixed costs = $200,000; variable costs = $38 per unit; required return = 10 percent. Ignoring the eff..

  The firm faces an average tax rate

What is B2B’s WACC if the firm faces an average tax rate of 30 percent?

  What is the risk-free rate of return

The expected return on HiLo stock is 14.65 percent while the expected return on the market is 13.5 percent. The beta of HiLo is 1.21. What is the risk-free rate of return?

  Which bond will give the client more profit after taxes

Determine the equivalent taxable yield. Which bond will give the client more profit after taxes?

  Calculate the npv of the project

ConnectDots Corp. is considering making a new product. Net working capital will be recovered at the end. Calculate the NPV of the project.

  Create three optimal decision rules for candies

Create three (3) optimal decision rules for Katrina’s Candies.

  Capital structure increase firm value

Given corporate taxes, why does adding debt to the capital structure increase firm value?

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