Constant growth-assuming market is in equilibrium

Assignment Help Financial Management

Reference no: EM131898770

eBook Problem Walk-Through

Constant growth

You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00) and has a beta of 0.9. The risk-free rate is 5.5%, and the market risk premium is 5.5%. Justus currently sells for $39.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P this on ontop of P ^ and this is below and the right side of P 3) Round your answer to two decimal places. Do not round your intermediate calculations. $

Reference no: EM131898770

Questions Cloud

New service to cuba two competitors are delta and jet blue : Make sure to select ratios that you think would be impacted by starting new service to Cuba two competitors are delta and jet blue

Determined using actual and actual convention : Accrued interest is determined using actual/actual convention. How much must Mary pay for the bond?

Major capital budgeting project for southwest airlines : Starting service to a new market, such as Havana, Cuba, is a major capital budgeting project for Southwest Airlines

Rodrigo revenue with the described income stream : What is the uniform monthly payment in years 2016-2017 that is equivalent to Rodrigo’s revenue with the described income stream?

Constant growth-assuming market is in equilibrium : Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years?

What are best-case and worst-case NPVs : McGilla Golf has decided to sell a new line of golf clubs. What are the best-case and worst-case NPVs?

The common calculation approach-top-down approach : A proposed new project has projected sales of $147,900, costs of $74,820, The common calculation Approach. The Top-Down Approach.

What is its new market value and stock value : Earley Corporation issued perpetual preferred stock with a 8% annual dividend. What is the stock's value? What is its new market value?

What is the firm horizon or continuing and value : Holt Enterprises recently paid a dividend, D0, of $2.25. How far away is the horizon date? What is the firm's horizon, or continuing, value?

User Account

All Pages