Investment in justus corporation

Assignment Help Finance Basics
Reference no: EM132265910

You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00) and has a beta of 0.9. The risk-free rate is 5.5%, and the market risk premium is 5.5%. Justus currently sells for $46.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is ?) Do not round intermediate calculations. Round your answer to the nearest cent

Reference no: EM132265910

Questions Cloud

Examine how would you handle the situation : You have been dispatched to assist the Sheriff's Department with a reporting shooting. You are told to stage two blocks west of the incident.
Inverse relationship between bonds : Thus, the required return is lowest for AAA-rated bonds, and required returns increase as the ratings get lower. Is this statement true or false?
What are the strengths and weaknesses in your writing : You have accomplished quite a bit this session. You have just about satisfied the writing requirement for this class in discussion posts, essays, and of course.
Create a decision tree which can predict class membership : INFT12-216: Data Science Assignment, Bond University, Australia. Create a decision tree which can predict class membership of the LEAVE variable
Investment in justus corporation : You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00)
Calculate the cost of equity for a corporation using capm : Calculate the cost of equity for a corporation using CAPM. Remember, if you are provided with a 6-month Treasury bill rate and a 20year Treasury bond rate
Disucss the properties of contemporary leadership model : How would you apply at least one contemporary leadership model from this chapter to a real (or hypothesized) health leadership situation or case?
Calculate the net present value of the new machine : The old equipment has a zero salvage value. Use straight line depreciation to calculate the depreciation. Calculate the net present value of the new machine?
Write a powerpoint presentation about obesity in america : Write a PowerPoint presentation about Obesity in America. The presentation will be submitted as an audio-narrated PowerPoint. Audio narration is a requirement!

Reviews

Write a Review

Finance Basics Questions & Answers

  What are the process of servant leadership

In Business leadership, what are the process of servant leadership; democratic leadership; and enlightened leadership?

  Compute the value of altman''s z score for delta air lines

Compute the value of Altman's Z-score for Delta Air Lines for each year from 2000-2004. Using the analyses in Parts a and b, discuss the most important factors that signaled the likelihood of bankruptcy of Delta Air Lines in 2005.

  What is the capitalized cost now

The Rustin Transportation Planning Board estimates the cost of upgrading a 4-mile section of 4-lane highway from public use to toll road to be $85 million now.

  What is a strong dollar doing to us tech companies

What is a strong dollar doing to U.S. tech companies?  How did a strong dollar impact Apple? What is Apple doing to circumvent the negative effects of a strong dollar?

  Calculate the difference between the cash flow and deductbil

Your company spent $5,000 last year on business related meals and entertainment. Calculate the difference between the cash flow and the deductibility of these expenses for tax purposes.

  Overcome before the objectives can be achieved

Identify and explain problems that must be overcome before the objectives can be achieved.

  What will be the companys return on equity

Under these conditions, the tax rate will be 40%. If the changes are made, what will be the company's return on equity? Round your answer to two decimal places.

  Explain the meaning of the image as a whole

In a brief 2-3 page analysis, identify the image you chose. Describe the meaning of the image as a whole. How imagery can be used in media?

  When a business is deciding to buy from suppliers how

when a business is deciding to buy from suppliers how important is price in their decision process? are there

  Draw a graph of money demand and money supply

Draw a graph of money demand and money supply with the nominal interest rate on the vertical axis and money balances on the horizontal axis.

  The friendly national bank holds 50 million in reserves

the friendly national bank holds 50 million in reserves atits federal reserve district bank. the required reserves

  Component cost of debt

The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year.  Assume the firm has sufficient retained earnings to fund the equity portion o..

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