How do find what is the expected current price

Assignment Help Financial Accounting

Reference no: EM132717385

Recently, an analysis of Caterpillar Inc. found that its equity beta (the beta on its stock) is 1.03 (this puts its volatility right in line with the broader market). The most recent annual dividend is $4.12/share. A survey of economist finds that the perceived market risk premium is around 6.5%. As of Oct 1, 2020, the yield on a 30-year U.S. Treasury was 1.45%. Given this information, answer the following question.

Problem 1: a. Assume that dividends are expected to grow abnormally for the next 3 years at a rate of 10%. Then, long-term dividend growth is expected to stabilize at 4% annually. Given this information, what is the expected current price?

Reference no: EM132717385

Questions Cloud

Assignment on psychological disorder : Choose a psychological disorder form chapter 15 and answer the following questions with information from the book and outside sources.

Which capital markets research suggests that the firm : Which Capital markets research suggests that the firm with more voluntary disclosures are likely to have? higher information asymmetry

Development of ptsd a traumatic event : List and explain some of the risk factors associated with the development of PTSD following a traumatic event. What qualifies as traumatic?

What is the problem that decision maker is trying to solve : What is the problem that the decision maker is trying to solve and Identify and describe FIVE evaluation criteria that Labatt should use to assess the options

How do find what is the expected current price : Find what is the expected current price? Recently, an analysis of Caterpillar Inc. found that its equity beta (the beta on its stock) is 1.03

Two basic treatments of mental illness : Name and describe the two basic treatments of mental illness, giving examples from the historical development of each.

Find new drug to help people gain an appetite : You are working on a new drug to help people gain an appetite. Which of the following peptides might you target?

Make journal entries to record peru : Make journal entries to record Peru's 2020 and 2021 summarized transactions and the adjusting entries to record bad debt expense at the end of each year.

What part of the brain is affected by bipolar disorder : What part of the brain is affected by bipolar disorder?

User Account

All Pages