Determine the value of the company stock

Assignment Help Financial Accounting
Reference no: EM132827506

PROBLEM 1 - Assume the risk-free rate is 6 percent and the market risk premium is 6 percent. The stock of Cigna (CI) has a beta of 1.5. The last dividend paid by Cigna (D0) was $2 per share.

a. What would Cigna's stock value be if the dividend was expected to grow at a constant -5 percent? 0 percent? 5 percent? 10 percent?

b. What would be the stock value if the growth rate is 10 percent, but Cigna's beta falls to 1.0? 0.5?

PROBLEM 2 - Zimmer Holdings (ZMH), has maintained a dividend payment of $4 per share for many years. The same dollar dividend is expected to be paid in future years. If investors require a 12 percent rate of return on investments of similar risk, determine the value of the company's stock.

Reference no: EM132827506

Questions Cloud

Handling similar situations in the future : Suggest a strategy the writer did not mention that you believe might be effective in handling similar situations in the future
What are the monthly cash inflows for the months of January : Company Terms of Sale are: 35% cash, 40% net 30, and 25% net 60. What are the monthly cash inflows for the months of January thru June, by month
Discuss your major takeaways from the book : Discuss your major takeaways from the book. How will you apply the theories and practices outlined in the book? Identify at least five (5) major topics that.
How might a manager gain insight into the causes of flexible : How might a manager gain insight into the causes of flexible-budget variances for direct materials, labor, and overhead? Provide at least one numerical example
Determine the value of the company stock : If investors require a 12 percent rate of return on investments of similar risk, determine the value of the company's stock
Discuss way globalization has changed jobs in organizations : Students should read the chapter and other supplemental information then discuss the way globalization has changed jobs in organizations.
Identify a major public infrastructure project : Identify a major public infrastructure project that is either underway, complete, or proposed in your region. This could be a bridge, road, building
Assignment on balanced scorecard : Please create a vision and mission for Maloneys that makes sense for them.
What is the present value of the stream of payments : You have just won the CPA-T Best graduate prize of TSHS 11,000,000. What is the present value of the stream of payments you will receive

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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