How much is the stock currently over or under priced

Assignment Help Financial Management

Reference no: EM131850585

A stock is currently selling for $40 per share. Based on the last twelve months, this represents a P/E ratio of 12.5 and a dividend yield of 4.8%. After an analysis of all the relevant variables, you estimate that the dividends per share will grow at an annual compound rate of 8% and that the company will maintain the same payout ratio each year as the previous year. The stock is expected to sell at a 15 P/E ratio at the end of the third year. Your required rate of return is 12% per year. Based on a three-year investment horizon and assuming that all your estimates are correct, how much is the stock currently over or under priced?

Reference no: EM131850585

Questions Cloud

Explore your own body and your knowledge : In this week's iLab, you will explore your own body and your knowledge of over the counter medications

Calculate the number of years until maturity : You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016.

Read one of the assigned manual : Read one of the assigned manual and provide a brief summary on what you learned and how you can implement it in your clinical practice with caring for patients.

Discuss common foods with high risk of food-borne : Discuss common foods with high risk of food-borne illnesses and nursing interventions to reduce risk.

How much is the stock currently over or under priced : Based on a three-year investment horizon and assuming that all your estimates are correct, how much is the stock currently over or under priced?

Explain the harms that irbs are concerned with in research : Explain the harms that the IRBs are concerned with in research. Discuss one example of an ethical issue and how the ethical principles apply to this issue.

Matter to you where and how your food is grown : Does it matter that your food is locally gowned and handled by people who are given a fair salary/pay?

Which element of the transaction model creates the problems : Give an example of a positive comment and a negative comment that you have come across in social media. Why was it good/bad?

What can be done to prevent such problems : Why is it necessary to collect data in a centralized location such as the patient's chart using the SOAP Method? What can be done to prevent such problems?

User Account

All Pages