Dividend will continue to grow indefinitely

Assignment Help Finance Basics
Reference no: EM131763517

A company just paid a dividend of $1.60 per share. You expect the dividend to grow 11% over the next year and 10% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 4% per year. If the required rate of return is 10% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

Reference no: EM131763517

Questions Cloud

Calculate the cost of merchandise sold : Assuming the business maintains a perpetual inventory system, calculate the cost of merchandise sold and ending inventory under First-in, first-out
Calculate the standard deviation for the sample of heights : Calculate the standard deviation for this sample of heights. Draw the complete tree diagram, with all of the twig probabilities in place.
What is the amount of the safe payment to partner : The XY partnership is undergoing an installment liquidation. X and Y share income equally, and have current capital balances of $30,000 and $60,000.
Compute ending inventory valuation at december : Compute ending inventory valuation at December 31, 2016, under the FIFO and LIFO cost-flow assumptions
Dividend will continue to grow indefinitely : A company just paid a dividend of $1.60 per share. You expect the dividend to grow 11% over the next year and 10% two years from now.
What would be a fair price for stock today : If the required rate of return is 9% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)
What is hrs ethical duty : Explain why this may fall under corporate responsibility and insider trading - what's HR's ethical duty - Explain why this may fall
Calculate the total cost and per unit cost of job : Jills Manufacturing produces light bulbs for big department stores. REQUIRED: Calculate the total cost and per unit cost of Job 80
Calculate the actual variable overhead cost : XYZ Company reported the following information regarding its single product for May: Calculate the actual variable overhead cost incurred during May.

Reviews

Write a Review

Finance Basics Questions & Answers

  Discuss the potential tax consequences

Discuss the potential tax consequences that could result by deferring the sale of stock into a different tax year. Be specific with your recommendations.

  What was the return on the companys stock for the period

if during a period a company paid a dividend of 5 and the price per share was 60 at the beginning of the period and 75

  What will be the portfolio expected rate of return

What do you think will happen to the portfolio's expected rate of return and standard deviation if the portfolio contained 75 percent of Project B?

  What is the npv of the expected cash flows from project

What is the NPV of the expected cash flows from this project? Assume a discount rate of 20%.

  Calculate market value of the firms common equity

Suppose a firm has been growing at a 15% yearly rate and is expected to continue to do so for 3 more years. At that time, growth is expected to slow to a constant 4% rate.

  Determine the firm''s cost of capital

Given the following information interest rate                        8% tax rate                              30%

  Briefly describe the current international monetary system

Briefly describe the current international monetary system. What are the different types of exchange rate systems?

  What is the amount of the annual dividend

The preferred stock of ABC Co. offers a 9.5% rate of return. The stock is currently priced at $60.00 per share. What is the amount of the annual dividend?

  Insights from overall team discussion

Prepare a 350- to 1,050-word paper (1-2 pages) pulling together the insights from your overall team discussion, linking those insights to the research you did in Week One. For instance: What was an assumption you had that might be wrong? What did ..

  Computation of interest payable

Computation of interest payable and Prepare the issuer's journal entry to record the issuance of the bonds

  Find the finance charge and the new balance

Phil had an unpaid balance of $1,854.50 on his credit card statement at the starting of December. He made a payment of $45.00 during the month.

  Probability of a seed turning

Mimi plans on growing tomatoes in her garden. She has 20 cherry tomato seeds. Based on her experience, the probability of a seed turning into a seedling is 0.60

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