Nonconstant growth-stock expected to grow after year three

Assignment Help Financial Management

Reference no: EM131896740

Nonconstant growth

Carnes Cosmetics Co.'s stock price is $48.27, and it recently paid a $3.00 dividend. This dividend is expected to grow by 20% for the next 3 years, then grow forever at a constant rate, g; and rs = 16%. At what constant rate is the stock expected to grow after Year 3? Round your answer to two decimal places. Do not round your intermediate calculations. %

Reference no: EM131896740

Questions Cloud

What does the market believe will be the stock price : Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years?

Forward premium or discount of the brazilian real : Assuming the existence of interest rate parity, determine the forward premium or discount of the Brazilian Real

Set up private cemetery business : The Yurdone Corporation wants to set up private cemetery business. The company is somewhat unsure about assumption of 5 percent growth rate in its cash flows.

Present value of its growth opportunities : A company has expected earnings of $3 per share for next year. What is the present value of its growth opportunities?

Nonconstant growth-stock expected to grow after year three : Carnes Cosmetics Co.'s stock price is $48.27, and it recently paid a $3.00 dividend. At what constant rate is the stock expected to grow after Year 3?

What is the value of the lease : The annual depreciation tax shield is $1,760 and the after-tax annual lease payment is $6,800. What is the value of the lease?

How much cash was spent during year related to restructuring : How much cash was spent during the year related to restructuring?

Valuation of a constant growth stock : What is its value if the previous dividend was D0 = $2.25 and investors expect dividends to grow at a constant annual rate of (1) -7%,

The pretax or the aftertax cost of debt : What is the pretax cost of debt? Which is more relevant, the pretax or the aftertax cost of debt?

User Account

All Pages