Find the terminal stock price using a benchmark PE ratio

Assignment Help Financial Management

Reference no: EM131198341

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.85. The dividends are expected to grow at 10 percent over the next five years. In five years, the estimated payout ratio is 45 percent and the benchmark PE ratio is 35.

What is the target stock price in five years?

Reference no: EM131198341

Questions Cloud

It auditing and security risk management : At this point, you have a pretty clear understanding that although PVSS has a desire to do things in sound and secure fashion, it is not able to consolidate efforts and focus its attention in appropriate places.

Discuss whether the net worth terms you have found : Based on the two separate articles information presented, discuss whether the net worth terms you have found/used in your paper appears to be referring to for-profit corporations.

What are the major financial issues being faced : Write a paper (1,250-1,500 words) that describes the roles and responsibilities of health care management in addressing this pressing dilemma. Apply the following questions to generate your conclusions about how you would proceed: How do the consi..

Design bcp for sangrafix : You have been hired as a consultant to design BCP for SanGrafix, a video and PC game design company. SanGrafix's newest game has become a hot seller, and the company anticipates rapid growth.

Find the terminal stock price using a benchmark PE ratio : In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. What is the target stock price in five years?

Determine what role health plays in developing economies : Determine what role health plays in developing economies. Examine the role that the International Monetary Fund and World Bank play in transfers and the conditions they set to effect this funding.

What is the company unlevered cost of equity capital : Twice Shy Industries has a debt−equity ratio of 1.2. Its WACC is 9 percent, and its cost of debt is 5.7 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital? What is the company’s unlevered cost of equity capita..

Internet service provider : An Internet service provider has three different subscription packages for its customers: Package A: $9.95 per month for 10 hours access. Additional hours are $2.00 per hour Package B: $13.95 per month for 20 hours access. Additional hours are $1.00 ..

What is the companys net working capital : Winston Electronics reported the following information at its annual meetings. The company had cash and marketable securities worth $1,236,830, accounts payables worth $4,160,690, inventory of $7,122,130, accounts receivables of $3,489,360, notes pay..

User Account

All Pages