Estimate the value of common stock

Assignment Help Finance Basics

Reference no: EM1351003

Company has had declining sales and increasing expenses over the last decade and expects this trend to continue. As a result, the company predicts that earnings and dividends will decline indefinitely at a rate of 4% per year.

Company's last dividend (D/OD) was $2 per share. If the market required rate of return is 125%, estimate the value of company's common stock.

Please provide formulas for your response. Thanks.

Reference no: EM1351003

Questions Cloud

Training influence the development of jean piaget theory : Who was Jean Piaget as a person and how did his background and training influence the development of his theory?

Employee contracts : Which would include a provision requiring proof of a legitimate business reason if the employee is separated from employment?

Level of participation in risk management activities : High level of participation in risk management activities - Why is it helpful to have a high level of participation in risk management activities?

Auditing-purchase department frauds : How can a purchasing manager use his/her position to defraud the company? What can be done to prevent it? Where could an auditor look to find evidence of losses on purchase commitments and unrecorded liabilities to vendors?

Estimate the value of common stock : The Corporation had declining sales and rising expenses over the last decade and expects this trend to continue. As a result, company predicts that earnings and dividends will decline indefinitely at a rate of 4 percent per year.

Cognitive method form of therapy : What are cognitive theories? Can someone pick one cognitive method and discuss the approach, skills, and technique used in the theory? What population would benefit from this cognitive method form of therapy?

Accounting controls-corporate fraud : Given the increased emphasis on corporate fraud, should auditors be required to look aggressively for fraud factors like collusion, circumvention and management override? Why or why not?

Bank fraud-audit procedures : Discuss what lapping means. What procedures can auditors employ for its detection? What is a cutoff bank statement? How are they used by auditors?

User Account

All Pages