Share is overvalued and undervalued or properly valued

Assignment Help Financial Management

Reference no: EM131349133

X shares are expected to pay a dividend of €1.2 at the end of each of the next two years, respectively.

The analyst estimates: the required rate of return to be 7%; the expected price at the end of this 2-year holding period to be €28.00. The current price is €27.00.?

Calculate the value of the shares today. Determine whether X share is overvalued, undervalued, or properly valued?.

Reference no: EM131349133

Questions Cloud

Find new cost of equity-cost of dept and cost of capital : You have been asked to avaluate the capital structure decisions made by the company xzy. You have the following information about the company. The firm has 10 million shares, currently trading at 8€ per share. Find the company's cost of capital (WACC..

Compute the correct foward rate implied by the interest rate : The current level of real estate prices in Moscow seem to be on reasonable level and you consider that this is just the right time to step into market. You have noticed noce apartment in the Leninsky Prospect close to the city centre. try to show wit..

Low-regular-and-extra dividend policy : Bennett Farm Equipment Sales, Inc., is in a highly cyclic business. Although the firm as a target payout ratio of 25%, its board realizes that strict adherence to that ration would result in a fluctuating dividend and create uncertainty for the firm'..

What is the value of shares : ABC is a profitable company that is expected to pay a €4.25 dividend next year. The best estimate is that dividends will decline forever at a rate of 10 percent. The required rate of return on ABC stock is 12 percent. ?What is the value of ABC shares..

Share is overvalued and undervalued or properly valued : X shares are expected to pay a dividend of €1.2 at the end of each of the next two years, respectively. The analyst estimates: the required rate of return to be 7%; the expected price at the end of this 2-year holding period to be €28.00. The current..

How sensitive is model value to changes in estimates of r-g : The Gordon growth model value for X company was estimated as €22.18 based on: What if the estimates of r and g can each vary by 25 basis points? How sensitive is the model value to changes in the estimates of r and g ??

Flotation cost as percentage of funds raised : The Collins Co. has just gone public. Under a firm commitment agreement, the company received $33.20 for each of the 4.22 million shares sold. What was the flotation cost as a percentage of funds raised?

Determine optimal capital structure : How would a financial manager determine optimal capital structure? How would this fit in with the company's capital expenditures, growth plans and operating results?

Number of shares offered-how many shares need to be sold : The Zuri Co. needs to raise $65.3 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. How many shares need to be sold?

User Account

All Pages