Determine pay for the stock

Assignment Help Finance Basics

Reference no: EM1350139

The National Motor Company's last dividend was $1.25 and the directors expect to maintain the historic 4% annual rate of growth. You plan to purchase the stock today because you feel that the growth rate will increase to 7% for the next three years and the stock will reach $25 per share.

a. How much should you be willing to pay for the stock if you require 16% return?

b. How much should you be willing to pay for the stock if you feel that the 7% growth rate can be maintained indefinitely and you require a 16% return.

Reference no: EM1350139

Questions Cloud

What are magnitudes of horizontal and vertical components : A uniform-density 8 kg disk of radius 0.27 m is mounted on a nearly frictionless axle. Initially it is not spinning. A string is wrapped tightly around the disk, and you pull on the string with a constant force of 39 N by a distance of 0.7 m. Now ..

South african culture communication : What influence does South African culture have on communication? Explain two ways misunderstandings might occur among cultures such as South Africa and the United States with different communication styles.

Describing dichotomy is not linearly separable : Let the d component of x be either 0 or 1. Assume we assign x to w1 if number of non-zero components of x is odd, and to w2 otherwise. Illustrate that this dichotomy is not linearly separable if d>1.

Importance of cash-flow conversion cycle : Describe the importance of the cash/flow conversion cycle. 2) Compare and contrast various current asset management techniques. 3) Compare and contrast the various methods of short-term financing.

Determine pay for the stock : The National Motor Corporations last dividend was $1.25 and the directors expect to maintain the historic 4 percent yearly rate of growth. You plan to purchase the stock today because you feel that the growth rate will increase to 7 percent.

Impediments of resolving conflicts : Explain what are key sources of conflict in the organizational setting and what are the key impediments to efficiently resolving conflict in a negotiation?

Grow to liability for fraud is normally based on a statement : The reliance that gives Rose to liability for fraud is normally based on a statement of

Explaining multicategory case a set of samples : In multicategory case a set of samples is said to be linearly separable if there exists linear machine which can classify them all correctly.

Prepare potential non-organizational conflicts : Prepare potential non-organizational conflicts that could arise for your company as you build the dams.

User Account

All Pages