Find the expected dividends

Assignment Help Financial Management

Reference no: EM131354232

Selena Gomez has asked you to analyze the following stock as a possible investment. It's most recent dividend was $1.95. Selena believes that the dividend will grow at the rate of 3.25% annually for the next 3 years. She is planning a huge wedding in three years and intends to sell the stock at that time. Her opportunity cost of capital is 4.5%. Be sure to show all the steps in your calculations in case Selena has any questions.

Find the value of the stock in three years, when Selena intends to sell the stock

please show all calculations and work

Find the price of the stock today, Po, using the free cash flow valuation model

Explain how to use the free cash flow valuation model. For this portion you should put your comments in a textbox.

Reference no: EM131354232

Questions Cloud

Lauren have in her account at the end of seven years : Lauren plans to deposit $6000 into a bank account at the beginning of next month and $225/month into the same account at the end of that month and at the end of each subsequent month for the next 7 years. If her bank pays interest at a rate of 4%/yea..

What is the firm market value capital structure : Hankins Corporation has 8.9 million shares of common stock outstanding, 640,000 shares of 7.4 percent preferred stock outstanding, and 189,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. What is the firm's market value capital..

What is after-tax cash flow : XYZ Co. has revenue for this year of $66,700. The Overhead Costs are $21,250; the Labor Costs are 34,570; and Depreciation is $12,480. The corporate tax rate is 34%. What is the Net Income for XYZ for the year? What is the After-Tax Cash Flow (ATCF)?

In evaluating capital budgeting proposed project : In evaluating a Capital Budgeting proposed project, you have the expected After Tax Cash Flow, the life of the proposed project and the Weighted Average Cost of Capital (WACC). The most important of these is the ___ because ___

Find the expected dividends : Selena Gomez has asked you to analyze the following stock as a possible investment. It's most recent dividend was $1.95. Selena believes that the dividend will grow at the rate of 3.25% annually for the next 3 years. Find the expected dividends. Find..

Difference between short synthetic and short currency : Why would anyone do a long synthetic or a short synthetic? What is the difference between a long synthetic and a long currency? What is the difference between a short synthetic and a short currency?

Net present value approach to capital budgeting : The decision criterion in the net present value approach to capital budgeting is to accept the project if ______, and otherwise to reject the project.

What exchange rate do you start to lose money : From the perspective of the writer of a put option written on €62,500. If the strike price is $1.55/€, and the option premium is $1,875, at what exchange rate do you start to lose money?

Cash flows in sophisticated capital budgeting techniques : The rate used to discount the firm's cash flows in sophisticated capital budgeting techniques is called the:

User Account

All Pages