Estimate the current stock price

Assignment Help Finance Basics

Reference no: EM1362545

A stock is not expected to pay a dividend over the next 4 years. Five years from now the company anticipates that it will establish a dividend of $1 a share (D5=$1). Once the dividend is established, the market expects that the dividend will grow at a constant rate of 5% per year for the indefinite future. The risk-free rate is 5%, the companys beta is 1.2, and the market risk premium is 5%. The required rate of return on the companys sock is expected to remain constant. What is the current stock price?

Reference no: EM1362545

Questions Cloud

Determine market price : The probability distribution for kM for the coming year is as follows: If kRF = 6.05 percent and Stock X has a beta of 2.0, an expected constant growth rate of 7%,

Unrealized loss on investments : Furriers purchased 1000 shares of Loose Corporation stock on January 10, 2005, for $800 per share and classified the investment as securities Available for Sale.

Determine expected price of the stock : Graham Enterprises anticipates that its dividend at the end of the year will be $2 a share. The dividend is expected to grow at a constant rate of 7% a year.

Explain tacit and explicit knowledge : Give three examples of tacit knowledge; provide three examples of explicit knowledge. Discuss how you might use this knowledge.

Estimate the current stock price : A stock is not expected to pay a dividend over the next four years. Five years from now the company anticipates that it will establish a dividend of $1 a share.

Show conversation platforms and a people channel : What are the advantages of narrowing strategic messages into a Conversation Platform and why is the People Channel critical to effective leadership communication?

Show implementation of a project communications management : Would the implementation of a Project Communications Management team help prevent similar problems in the future

Finance area of a company : You are an individual within the finance area of your company, and you are preparing final budgets to present to your board of directors for the coming year.

Difference between profit and contribution : Discuss the difference between profit and contribution in an objective function and explain how do multilateral and regional financial institutions promote global business?

User Account

All Pages