Computing stock price with no growth opportunities

Reference no: EM13826264

Problem:

One share of Jumanji Inc. currently sells for $42 per share and has just paid an annual dividend of $1.25 per share. The investors in Jumanji expect the stock to earn an annual rate of return of 12%.

(a) What would have been the stock price today if Jumanji had no growth opportunities?

(b) What is the present value of growth opportunities?

Additional Information:

This question is basically belongs to the Finance as well as it explains about computing stock price with no growth opportunities, present value of growth opportunities.

Reference no: EM13826264

Questions Cloud

Amy kazmin in new delhi for financial times : India to act over predatory airline pricing by Amy Kazmin in New Delhi for Financial Times; Published in Nov, 25, 2010.

The f is statistically significant at the specified alpha : 14. For each of the following F values, indicate whether the F is statistically significant at the specified alpha level:a. F = 4.80, df = 4, 40 α = 0.01b. F = 5.02, df = 3, 60, α = 0.001

How to change the management style : The presentation is about how to change the management style of a typical American type management training to suit the situation in those respective cultures

Variable cost and fixed costs of hamburger production : In a slow year, Deutsche Burgers will produce 2.0 million hamburgers at a total cost of $3.6 million. In a good year, it can produce 4.5 million hamburgers at a total cost of $5.1 million. What are the variable cost and fixed costs of hamburger produ..

Computing stock price with no growth opportunities : One share of Jumanji Inc. currently sells for $42 per share and has just paid an annual dividend of $1.25 per share. The investors in Jumanji expect the stock to earn an annual rate of return of 12%.

Financial distress-what would be the beta of your portfolio : We Do Bankruptcies is a law firm that specializes in providing advice to firms in financial distress. It prospers in recessions when other firms are struggling. Consequently, its beta is negative, −.2. Suppose you invested 90% of your wealth in the m..

What type of trade restrictions does the country use : The problem belongs to Economics and the problem is about a report on the 2008 National Trade Estimate Report on Foreign Trade Barriers on specific country.

Write a report on market segmentation for a business : Write a report on market segmentation for a business

Generate expected cash flows : You are considering acquiring a firm that you believe can generate expected cash flows of $10,000 a year forever. However, you recognize that those cash flows are uncertain. Suppose you believe that the beta of the firm is .4. How much is the firm wo..

User Account

All Pages