Market rate of return on similar securities

Assignment Help Financial Management

Reference no: EM13937205

Apple currently does not pay a dividend and they have announced to the market that they will not pay a dividend for the next ten years. However, analysts expect that they will pay their first dividend of $1.89 in eleven years and they feel that the company will double the annual dividend payment each year for the following 3 years (i.e. years 12-14). After that time (i.e. years 15 and beyond), they expect the company to level off their growth with their dividend growing at a constant rate of 5 percent per year thereafter. What is one share of this stock worth today if the market rate of return on similar securities is 12 percent?

Reference no: EM13937205

Questions Cloud

Value this option using a two-period binomial tree : Consider a six-month European put option on one stock. Suppose that the current stock price is 15, the strike price is 18.5, the continuously compounded risk-free rate is 2% per annum, and the volatility of the stock is 10% per annum. Value this opti..

What is the yield to call if the call price : Assume a municipal bond has 18 years until maturity and sells for $5640. It has a coupon rate of 5.70% and it can be called in 10 years. What is the yield to call if the call price is 110% of par?

Estimated salvage value at the time is expected : A company has decided to purchase new office furniture with a useful life of 12 years for $100,000. Sales tax for the furniture was $6,000, and inbound transportation costs were $4,000. Its estimated salvage value at the time is expected to be $5,000..

Effective income tax rate : Suppose for some year the income of a small company is $110,000; the expenses are $65,000; the depreciation is $25,000; and the effective income tax rate = 40%. For this year, the ATCF is:

Market rate of return on similar securities : Apple currently does not pay a dividend and they have announced to the market that they will not pay a dividend for the next ten years. However, analysts expect that they will pay their first dividend of $1.89 in eleven years and they feel that the c..

The tax liability resulting from this sale : A company sold a piece of equipment during the current tax year for $78,600. The accounting records show that its cost basis, B, is $190,000 and the accumulated depreciation is $139,200. Assume that the effective income tax rate is 40%. The tax liabi..

What is the current value of one share of this stock : The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 16 percent a year for the next 4 years and then decreasing the growth rate to 5 percent per year. What is the current valu..

Discount interest tax shields at unlevered cost of equity : After reading all about the tax advantages of having a high leverage ratio, the CEO of WMart is considering a leveraged recapitalization and wants to know the value of his firm subsequent to the recap. Using the information above regarding WMart an..

A spread is an investment strategy : A SPREAD is an investment strategy that involves the simultaneously buying and selling equal number of options on the same underlying security but with different strike prices

User Account

All Pages