Implied value of the roe on future investment opportunities

Assignment Help Financial Management

Reference no: EM131524936

The FI Corporation's dividends per share are expected to grow indefinitely by 11% per year.

a. If this year's year-end dividend is $6.60 and the market capitalization rate is 24% per year, what must the current stock price be according to the DDM? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Current stock price $

b. If the expected earnings per share are $8.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

Value of ROE %

c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Amount $ per share

Reference no: EM131524936

Questions Cloud

What is the history of government involvement : In recent years, a number of coal-miners have suffered severe accidents at the hands of their employers. What is the history of government involvement

What is the intrinsic value of a share of xyrong stock : What is the intrinsic value of a share of Xyrong stock? what is your expected 1-year holding-period return on Xyrong stock?

What is the expected return on the portfolio : Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio.

Current market price of stock reflects its intrinsic value : Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM,

Implied value of the roe on future investment opportunities : If the expected earnings per share are $8.00, what is the implied value of the ROE on future investment opportunities?

What is your estimate of chiptech intrinsic value per share : What is the market price of Chiptech stock? What is your estimate of Chiptech’s intrinsic value per share.

Analyze the major professional roles that physicians play : Analyze the major professional roles that physicians and nurses play, as they apply to following the requirement for obtaining patient consent

Develop working or friendly relationships with members : Is there a possibility of corruption when officers develop working or friendly relationships with members of the public as part of a community policing strategy

Describe a progression of changes in corrections from : Describe a progression of changes in corrections from The Reformatory Movement (1870s to 1890s) to the Crime Control Model

User Account

All Pages