Estimate of the intrinsic value of a share of the stock

Assignment Help Financial Management
Reference no: EM131520364

The Duo Growth Company just paid a dividend of $3.4 per share. The dividend is expected to grow at a rate of 25% per year for the next 3 years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 18% per year.

a. What is your estimate of the intrinsic value of a share of the stock? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Intrinsic value per share $ ____?

b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

Expected dividend yield_____%?

c. What do you expect its price to be 1 year from now? What is the implied capital gain? (Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)

 Expected price $_______

 Capital gain _____%

Reference no: EM131520364

Questions Cloud

The market for corporate control suggests : The market for corporate control suggests that:
What are the fixed costs of hamburger production : What are the fixed costs of hamburger production? What is the variable cost per hamburger?
What is estimate of ggs intrinsic value per share : What is your estimate of GG’s intrinsic value per share? Assuming its current market price is equal to its intrinsic value,
Pangbourne whitchurch has preferred stock outstanding : Micro Spinoffs Inc. issued 20-year debt a year ago at par value with a coupon rate of 4%, paid annually.
Estimate of the intrinsic value of a share of the stock : What is your estimate of the intrinsic value of a share of the stock? What do you expect its price to be 1 year from now? What is the implied capital gain?
What is the expected return on the stock based on the capm : What is the expected return on the stock based on the CAPM?
What must be the variable cost per unit : What must be the variable cost per unit?
What is the sharpe index : The stock's beta is 1 and its standard deviation of returns is 12 percent. What is the Sharpe Index?
What is project npv in the best-case scenario : What is project NPV in the best-case scenario, that is, assuming all variables take on the best possible value?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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