Find what is the stock value using given information

Assignment Help Finance Basics
Reference no: EM131953152

Question: California Clinics, an investor-owned chain of ambulatory care clinics, just paid a dividend of S2 per share. The firm's dividend is expected to grow at a constant rate of S percent per year, and investors require a IS percent rate of return on the stock.

a. What is the stock's value?

b. Suppose the riskiness of the stock decreases, which causes the required rate of return to tall to 13 percent. Under these conditions, what is the stock's value?

c. Return to the original 15 percent required rate of return. Assume that the dividend growth rate estimate is increased to a constant 7 percent per year. What is the stock's value?

Reference no: EM131953152

Questions Cloud

Find arbitrage opportunity among these rates : You want to find an arbitrage opportunity among these rates. Is there any one that seems to be mispriced?
Discuss tax ability : Alpha Ltd holds 60% shares in Beta Ltd. and 20% in Gama Ltd. Discuss tax ability.
Calculate total nominal rate of return : Calculating returns: One year ago, you bought an 8.75 percent coupon bond for $1,065. Today the bond sells for $990.
Calculate the probability of bankruptcy : Calculate the probability of bankruptcy when the nominal interest rate for a risky borrower is 8% and the nominal policy rate of interest is 3%.
Find what is the stock value using given information : California Clinics, an investor-owned chain of ambulatory care clinics, just paid a dividend of S2 per share. The firm's dividend is expected to grow.
Portfolio new beta be after these transactions : What will the portfolio's new beta be after these transactions?
What is the value of the calendar : What is the value of the calendar (aka how much you can sell the spread for) if underlying trades at $102 one day later, BASED on theta/gamma/delta?
What is raymond reservation price : Assume lease payments occur at year-end. What is Raymond’s reservation price? What is Liberty’s reservation price?
What should calisto launch services do : Calisto Launch Services is an independent space corporation and has been contracted to develop and launch one of two different satellites.

Reviews

Write a Review

Finance Basics Questions & Answers

  Hires workers to harvest the grapes

King Estate makes an award winning Pinot Noir and hires workers to harvest the grapes. The diagram below shows the value of the marginal product.

  What is company weighted average cost of capital

(Weighted average cost of capital) Alfa trading operates a quite successful chain of milk products and tea houses across the South Caucasus.

  Calculation of operating cash flows

Calculation of operating cash flows and what were the firm's earnings before taxes

  Annual increase in value of collectible

In 2012, a collectible was sold at an auction for $2,156. The item was originally sold in 1960 for $5. What was the annual increase in the value of the collectible?

  Present debt-to-equity ratio

Compute Ramirez's (a) present debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $500,000 to fund the project.

  A financial analyst at buckco ltd wants to compute the

a financial analyst at buckco ltd. wants to compute the companys weighted average cost of capital wacc using the

  Podcast about rediscovering products

Welcome to a podcast about rediscovering products you might have forgotten about. The consumer brand I'm going to focus on in my podcast

  What is the probability the first car

What is the probability the first car shown was red, the second was black, and the third was red again?

  Strategic corporate finance-initial public offerings

What type of IPO should Avaya use - a traditional IPO or an online auction? Based on your analysis and findings, what would you recommend to the executives of Avaya corporation?

  What is forward premium or discount on the 180 day euros

An investor wishes to buy euros spot ( at $ 1.3480) and sell euros forward for 180 days (at $1.3526). a- what is the swap rate on euros? b- what is the forward premium or discount on the 180-day euros?

  How much could the firm save annually in ordering costs

A produce distributor uses 790 packing crates a month, which it purchases at a cost of $10 each. How much could the firm save annually in ordering and carrying costs by using the EOQ?

  What is the value in using a simulation approach

What is the value in using a simulation approach?  What is sensitivity analysis and what is its purpose?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd