Determine the present value of dividends

Assignment Help Business Management
Reference no: EM132949577

-Create a spreadsheet that applies the variable-growth model to predict the intrinsic value of the Rhyhorn Company common stock. Assume that dividends will grow at a variable rate for the next three years (2019, 2020, and 2021). After that, the annual rate of growth in dividends is expected to be 7% and stay there for the foreseeable future. Starting with the latest (2018) annual dividend of $2.00 per share, Rhyhorn's earnings and dividends are estimated to grow by 18% in 2019, by 14% in 2020, and by 9% in 2021 before dropping to a 7% rate. Given the risk profile of the firm, assume a minimum required rate of return of at least 12%.
-Calculate the projected annual dividends over the years 2019, 2020, and 2021.
-Determine the present value of dividends during the initial variable-growth period.
-What do you believe the price of Rhyhorn stock will be at the end of the initial growth period (2021)?
-Having determined the expected future price of Rhyhorn stock in part c, discount the price of the stock back to its present value.
-Determine the total intrinsic value of Rhyhorn stock based on your previous calculations.

Reference no: EM132949577

Questions Cloud

Adhering to the requirements of the law : What obligation does business have to be ethical over and above merely adhering to the requirements of the law?
Define globalization : 1.Define globalization; global marketization and globalization of production
Why management plans fail : Identify the top reasons why management plans fail and discuss what steps you can take to manage organizational change successfully based on organizational cult
Discuss business environment : Discuss business environment that affect american apparel : drowning in debt
Determine the present value of dividends : -Create a spreadsheet that applies the variable-growth model to predict the intrinsic value of the Rhyhorn Company common stock. Assume that dividends will grow
Discuss the threat of industry entry : Discuss the threat of industry entry, and how to combat it
Identifying an industry analysis : What economic factors have to be considered in identifying an industry analysis?
Influence of digital technologies : Consider the influence of digital technologies on work and change in organizations. Is technology a transforming solution to problems or a volatile disruption t
Why global supply chain and logistic is important : Why global supply chain and logistic is important?

Reviews

Write a Review

Business Management Questions & Answers

  Advantages of using a mixture of brand research measures0

What are the advantages of using a mixture of Brand Research measures such as aided, unaided, qualitative and quantitative instruments?

  Calculating an inflation rate

A country reports a price index of 52 in 2005 and 60 in 2006. What is the inflation rate between 2005 and? 2006?

  Develop a marketing strategy to mei mei street kitchen

Apply the basic steps to develop a marketing strategy to Mei Mei Street Kitchen and Mei Mei Restaurant.

  Contrast the marketing strategy for convenience good

Identify a product that for each category: Convenience, standard brand and luxury brand. Compare and contrast the marketing strategy for convenience good, a moderately priced brand and a luxury brand.

  Project managers uses to estimate cost

What are some tool and techniques use to project managers uses to Estimate cost?

  Distinction between the short run and the long run

Economics - What is the distinction between the short run and the long run? In reality, does a company operate in the short run or in the long run? How do you know? Is it a reasonable distinction to have for a company?

  Crafting strategies for international markets

Locate and review three websites that inform you about Crafting Strategies for international markets, or multi-business companies, or diversified companies. You

  What is partnership business

What is partnership business and what are the advantages and disadvantages of partnership business?

  Size and type of shipping containers

Give the number, size and type of shipping containers to be used must be identified. This is dependent on how the product is packaged, packed

  Internet reporting and television and newspaper reporting

What were the differences between Internet reporting and television and newspaper reporting?

  Pharmacy management impact the patient experience

How does collaboration among retail stores and pharmacy management impact the patient experience?

  Good fit between the employee and the job requirement

What does its management look for in potential employees to ensure a good fit between the employee and the job requirement?

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