Determine the required rate of return for stock

Assignment Help Financial Management

Reference no: EM131087764

The beta coefficient for 1.63. In addition, 1.835 percent is the current 10 year t-Note rate. Assuming a 5.6 percent equity risk premium, determine the required rate of return for this stock.

Using the required rate of return, determine what you think this stock is worth to you (intrinsic value) if you assume a 6.65 percent growth rate. You need to use the dividend discount model.

Reference no: EM131087764

Questions Cloud

What is the proper tax treatment of these amounts : Hugh and Mary own a cabin in Big Bear that they rented for 45 days at $4,500. They used the cabin for personal use for 30 days during the year. The allocated expenses related to the cabin of $6,000 resulted in a net loss of $1,500 for this rental act..

Spot exchange rate for indian rupees : The spot exchange rate for Indian Rupees is Rs 44/$. The one-year forward exchange rate is Rs 46/$ and the one-year U.S. interest rate is 5%. What is the implied one-year interest rate in India?

Ending portfolio value compared with beginning investment : A company invests $ 1,000,000 at the brgining of the year. It adds another 250000 at the end of the first quater, withdraws $ 350000 at the end of the second quater adds $ 145000 at the end of the third quater and with draws $ 450000 of the remaining..

What is the project discounted payback : Project K costs $45,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 8%. What is the project's discounted payback?

Determine the required rate of return for stock : The beta coefficient for 1.63. In addition, 1.835 percent is the current 10 year t-Note rate. Assuming a 5.6 percent equity risk premium, determine the required rate of return for this stock. Using the required rate of return, determine what you thin..

Compute weighted average cost of capital : Speck delivery can buy a piece of equipment that is anticipated to provide an 11% return and can be financed at 6% with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 9% return but would cost 15% t..

Which dividends are expected to grow at rate : The last dividend paid by Acme, Inc. was $3.00. Acme's growth rate is expected to be 25% percent for three years, after which dividends are expected to grow at a rate of 5 percent forever. The company’s stockholders require a rate of return on equity..

Describe how managers use the concept in decision-making : Define the following financial concepts and describe how managers use the concept in decision-making:

Receipts during the life time of the project : What is the present worth of all disbursements and receipts during the life time of the project, evaluated at the beginning of the first year, if the project has the following costs: Phase 1 labor $2650000 (per year paid at the end of each year) Phas..

User Account

All Pages