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The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 23% per year for the next three 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? (Use intermediate calculations rounded to 4 decimal places. Round your answer to 2 decimal places.)
b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Use intermediate values rounded to 2 decimal places. Round your answer to 4 decimal places.)
c. What do you expect its price to be one year from now? (Use intermediate values rounded to 4 decimal places. Round your answer to 2 decimal places.)
d-1. What is the implied capital gain? (Use intermediate values rounded to 2 decimal places. Round your answer to 4 decimal places.)
d-2. Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?
How would your answer change if the value of the cedi was expected to remain unchanged from its current value of 8700 cedi per euro over the course of the three years? Should Cleto construct the plant then?
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Calculate the NPV for the firm if it conducts customer segment research, and if it goes to market immediately.
You wish to purchase a 20-year, $1,000 face value bond that makes semiannual interest payments of $40. what price should you be willing to pay for the bond?
Expert Security Inc. has 9 percent coupon bonds on the market with five (5 ) years left until maturity. These bonds make annual payments. If the yield to maturity on t he bond is 8 percent, what is the current price of the bond? What would be the pr ..
Construct a calendar spread using the August and October 170 calls that will profit from high volatility.- Generate a graph and use it to estimate the maximum and minimum profits and the breakeven stock prices.
You are a large investment bank credit trader considering trading on a new bond for Car Company.
Calculate the cost of each capital component for Apple: after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM method
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Sam was injured in an accident, and the insurance company has offered him the choice of $90,254 per year for 20 years, with the first payment being made today, or a lump sum. If a fair return is 5.88%, how large must the lump sum be to leave him as w..
The variance exhibited by the market is 42.9%. The standard deviation of returns for Vestco, Inc. is 6%. In a regression, you determine that the correlation of returns between the market and company is +0.23. Calculate the beta for the company?
Explain how the Black-Scholes option pricing model builds on the binomial model. Where does it make extensions? Where is it similar?
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