How much is the value of the stock to this investor

Assignment Help Finance Basics

Reference no: EM13282904

1.An investor is contemplating to purchase the common stock of GE at the beginning of the year and hold the stock for two years. The investor expects the year-end dividend to be $1.0 in the first year and $1.20 in the second year, and expects to sell the stock for $30 at the end of the second year. If this investor's required rate of return is 10 percent, then how much is the value of the stock to this investor? 2.Samurai is an Internet start-up company. At the beginning of this year the company announced its decision to go public by selling 1,000,000 shares at $15 per share. Like many other internet companies, it will not make any profit in the first two years after its initial public offering. However, it is expected that the company will make a profit in the third year and pay its first dividend of $1.0 per share at the end of that year. Moreover, dividends are expected to grow at a constant annual rate of 10% thereafter. Since this firm is risky, the required rate of return is 15%. Based on the above information, do you think the offer price is fair? Please explain.

Reference no: EM13282904

Questions Cloud

Explain thallium has an average atomic mass : Thallium has an average atomic mass of 204.3833 u. It has two naturally occuring isotopes, 203Tl (with a mass of 202.9723 u) and 205Tl (with a mass of 204.9745 u). Find the percent abundance of the two isotopes, to ±0.001%.

Determine the surface charge density as a function : A point charge Q is located at (0,0,d) above an infiniteconducting plane that lies in the xy-plane and is maintained atground potential. Find a) the surface charge density as a function of x and y on the conducting plane

Think about the decisions that were made for about the : After reading Doug Reeves review of the 90/90/90 studies, describe your initial reactions. What surprises you? What questions do you have about the studies and findings?

Determine the ratio of the pressures : The volume of an ideal gas is held constant. Determine the ratio P2/P1 of the final pressure to the initial pressure

How much is the value of the stock to this investor : Since this firm is risky, the required rate of return is 15%. Based on the above information, do you think the offer price is fair? Please explain.

Find the canonical pos of thefunction f using minterms : Consider the function f(x1,x2,x3,x4)= (x1 + x2 + ~x3 + x4)(~x1+ x4) a. Find the canonical POS of thefunction F using minterms. b. Derive the simplest POS expressionof F using algebraic manipulation.

Effective management policies : Provide an introduction to your position paper with a clear thesis statement that provides an overview of the paper- Analyze three (3) key issues involved with the correctional staff.

Explain fluorine has an average atomic mass : Fluorine has an average atomic mass of 18.998403 u, and chlorine has an average atomic mass of 35.453 u. How many grams of chlorine contain the same number of atoms as 1.00 g of fluorine

Find the capacitance of a capacitor required to raise pf : a load consisting of induction motor is draming 80 kw from a 220 v ,60 hz power line of 0.72 lagging .find the capacitance of a capacitor required to raise the pf to 0.92

User Account

All Pages