How much is this stock worth

Assignment Help Financial Management
Reference no: EM131492604

Suppose you buy a stock that will pay an annual dividend next year of $5. This firm's dividends are expected to grow at a rate of 6% per year. Investors' required rate of return for this stock is 16%. How much is this stock worth? a. $56.18 b. $50.00 c. $53.00 d. $33.33

Reference no: EM131492604

Questions Cloud

What will be after-tax cash flow of this sale : what will be the effect on cash flows of this sale (i.e , what will be after-tax cash flow of this sale)?
Calculator to compute monthly payments for vehicle : calculator to compute monthly payments for vehicle that costs $17,500 if you financed entire purchase over four years at annual interest rate of 7.75 percent.
What is your estimate of the current value of stock price : What is your estimate of the current value of the stock price using a two-stage DDM
What would annual yield to maturity be on bond : What would the annual yield to maturity be on the bond if you purchased the bond today?
How much is this stock worth : Suppose you buy a stock that will pay an annual dividend next year of $5. How much is this stock worth?
Assuming perfect capital markets-change firm equity beta : Firm Xi has a market beta for their equity of 1.2 and currently has a D/E ratio of 1.4. how does this change the firm’s equity beta
What is reward-to-volatility ratio of your risky portfolio : You manage risky portfolio with expected return of 18 percent and standard deviation of 28 percent.What is reward-to-volatility ratio of your risky portfolio
What is nominal yield to maturity and nominal yield to call : A firm's bonds have a maturity of 8 years with a $1,000 face value, What is their nominal yield to maturity? What is their nominal yield to call?
What is current market price of the bonds : What is the current market price (intrinsic value) of the bonds?

Reviews

Write a Review

Financial Management Questions & Answers

  Viewpoint of effectiveness and efficiency

Compare John and Mary from the viewpoint of effectiveness and efficiency.

  Calculate cost of equity using dividend growth model method

Laverne Industries stock has a beta of 1.42. The company just paid a dividend of $.92, and the dividends are expected to grow at 5.2 percent. The expected return of the market is 11.7 percent, and Treasury bills are yielding 5.2 percent. Calculate th..

  Issuance of the bonds by comenius corporation

On August 1, 2016 Comenius Corporation issued $10 million of 8% bonds at a price of 105. The bonds mature in 20 years. Each bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of Co..

  Offering certificates of deposit yielding

You are saving to buy a $235,000 house. There are two competing banks in your area, both offering certificates of deposit yielding 4.8 percent.

  Replace an existing assembly with a more modern version

The Cement Corp is planning to replace an existing assembly with a more modern version. the old equipment was purchased 5 years ago for $500,000 and depreciated to a zero value over the 5 years. If the cost of capital is 16% and the tax rate is 40%, ..

  Opportunities presented by internal operating structure

For pharmaceutical companies such as CVS Health Corp. and McKesson pharmaceutical ...(please answer question 1-5 below). Analyze opportunities presented by internal operating structure while creating innovative methods of achieving and maintaining fi..

  Although NOLs represent a potential source of value

Although NOLs represent a potential source of value, their use must be monitored carefully to realize their full value resulting from the potential for deferring income taxes. The sale of assets by a target firm will result in a taxable gain if the f..

  About the dollar and euro exchange rate

Murray Electric has agreed to buy precision lathes from Germany and is worried about the dollar/euro exchange rate. The total invoice amount is €800,000 to be paid in 6 months when the lathes are delivered. CrownJet has agreed to sell a 20-seater jet..

  The first deposit will occur one year from today

You will deposit $150 each of the next five years (the first deposit will occur one year from today, and there will be a total of 5 equal deposits) into an account that pays a 6.50% effective annual rate. Six years from today, you wish to have exactl..

  What is the geometric average return for period

A stock produced annual rates of return of 12.1 percent, −15.9 percent, 13 percent, and 16.2 percent over the past 4 years, respectively. What is the geometric average return for this period?

  What he will earn by paying taxes prior to deposit

Timothy Clum is in the 25 percent tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years, assuming the investment earns 8 percent annually. What is the amount of earnings that Timothy gives up by ..

  Weight average cost of capital

Twin Lakes Research Inc. (TLRI) is financed as follows. What is the market value of TLRI’s common shares? What is the total market value of TLRI?

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