Describe common stock valuation with different growth rates

Assignment Help Finance Basics

Reference no: EM1314339

Describe Common stock valuation with different growth rates over a period

Nonconstant growth Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 16% per year - during Years 4 and 5, but after Year 5 growth should be a constant 4% per year. If the required return on Microtech is 14%, what is the value of the stock today? Round the answer to the nearest hundredth.

Reference no: EM1314339

Questions Cloud

Fed advances and discounts on monetary base : Suppose, in a given week, float raises $900 million, Treasury deposits at the Fed rise $1500 million, discounts and advances decline $200 million, and foreign deposits at the Fed increase $150 million.

Payment receive-appreciation and depreciation : You are a financial adviser to a U.S. corporation that expects to receive a payment of 40 million Japanese yen in 180 days for goods exported to Japan.

Calculate the given matrices : Calculate the given matrices.

Determining the p-value : At the 5 percent level of significance, can we conclude that the mean weight is greater than 16 ounces? Determine the p- value.

Describe common stock valuation with different growth rates : Describe Common stock valuation with different growth rates over a period

Expansion for solow growth model : According to the Solow growth model, a country that increases its rate of capital investment can overcome diminishing marginal returns to capital and achieve sustained high growth over time.

Determination of nominal interest rate in money market : Explain how the Central Bank can set the nominal interest rate in the money market. In addition, explain how it can use expansionary monetary policy to boost GDP if the economy is in a recession.

Explain finding the required rate of return and valuation : Explain Finding the required rate of return and valuation of Preferred Stock where Preferred stock valuation Ezzell Corporation issued perpetual preferred stock with a 11% annual dividend

Hypothesis test and population mean : At the 5 percent level of significance, can we conclude that the mean weight is greater than 16 ounces? Determine the p- value.

User Account

All Pages