Suppose stock just paid a dividend

Assignment Help Financial Management
Reference no: EM131316412

Suppose a stock just paid a dividend of $3 and is expected to grow at a rate of 20% per year for the next two years before falling to a constant growth rate of 6%. If the required return on the stock is 14%, then what should the stock price be today?

Reference no: EM131316412

Questions Cloud

Evaluate a bad experience you have had with an appointment : From the e-Activity, analyze the importance of production planning and scheduling within an organization. Evaluate a bad experience you have had with an appointment from both perspectives of the customer (you) and the organization due to inefficie..
Simple interest on its savings account balances : First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a $69,000 deposit in each bank, how much more money would you earn from your Second City..
Earnings long-term debt plant and equipment : Which one of the following accounts is included in stockholders' equity? deferred taxes intangible assets accumulated retained earnings long-term debt plant and equipment.
Which inventory policy should el ma adopt for the product : Make an ABC classification (80-10-10) of the products by their monthly sales and by monthly average stock values, respectively. Which inventory policy should El.Ma adopt for the product named 'locking release 24V'?
Suppose stock just paid a dividend : Suppose a stock just paid a dividend of $3 and is expected to grow at a rate of 20% per year for the next two years before falling to a constant growth rate of 6%. If the required return on the stock is 14%, then what should the stock price be today?
Discuss ways of testing this hypothesis : Discuss ways of testing this hypothesis.Explain how the implementation of Six Sigma will result in the potential outcome.Buffalo Filter products were proven to hold toxic smokes, live cellular materials and viruses, this plume also caused respirator..
What are portfolio weights of each stock : If you own 500 shares of Alaska Air at $59.68, 550 shares of Best Buy at $68.12, and 300 shares of Ford Motor at $9.21, what are the portfolio weights of each stock? Portfolio weights Alaska Air Best Buy Ford Motor.
Evaluate different operations management principles : "Operations Management Applications" Please respond to the following: Evaluate different operations management principles and techniques that can make businesses more profitable today
Charitable remainder annuity trusts : What is the difference between the following four charitable trusts? Give 1 example for each. Charitable Remainder Unitrusts, Charitable Remainder Annuity Trusts, Charitable Lead Trusts, and Pooled Income Funds

Reviews

Write a Review

Financial Management Questions & Answers

  Explain the hedging strategy using future contracts

Explain the hedging strategy using future contracts that you could undertake to protect your cash flow from currency fluctuations.

  Considering the purchase of new production machine

Garcia’s Truckin’ Inc. is considering the purchase of a new production machine for $200,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $50,000 per year. What are the annual after-tax cash flows a..

  Margin account-what is your effective annual rate of return

You’ve just opened a margin account with $13,000 at your local brokerage firm. You instruct your broker to purchase 600 shares of Landon Golf stock, which currently sells for $82 per share. What is your total dollar return from this investment? What ..

  How can some risk be relevant and some risk not relevant

Provide a definition of risk using your own words. How does this definition apply to finance? How can some risk be relevant and some risk not relevant? Why are there more than one measure for risk regarding stock?

  Repayment would constitute an undue hardship

Jonathon Gerhardt was a professional cellist who had obtained over $77,000 in government-insured student loans to finance his education at the University of Southern California, the Eastman School of Music, the University of Rochester, and the New En..

  What circumstances or conditions could a high current ratio

Generally, a high current ratio is an indicator of good liquidity. Under what circumstances or conditions could a high current ratio be an indicator of problems with the company's current assets?

  Compute the geometric average of the rates of return

You purchased 100 shares of ABC stock for $20 per share. One year later you received cash dividends of $1 per share and sold the stock for $22 per share. Your holding-period return was _______________. Compute the geometric average of the following r..

  Unmatched record of investing

How do you reconcile Warren Buffett's unmatched record of investing with the writings of William J. Bernstein (The Four Pillars of Investing) and Jeremy Siegel (Stocks for the Long Run)? Specifically, how is it possible that any one person could out-..

  Suppose that the current spot interest rate for a term

The cash futures price of a 3-month zero coupon bond with a face value of $100 for delivery in 9.38 months from now is 96.31 dollars. Suppose that the current spot interest rate for a term of 12.38 months is 15.75 per cent per annum.

  Based on dividend growth model-price of stock will constant

Based on the dividend growth model, the price of a stock will remain constant if the dividend is cut, provided that the: Dividends tend to fluctuate in direct relation to changes in annual earnings. Managers are less concerned with the change in the ..

  Calculate the growth rate and P-E ratio

The market capitalization rate for Admiral Motors Company is 9%. Its expected ROE is 15% and its expected EPS is $7. If the firm’s plowback ratio is 40%. Calculate the growth rate and P/E ratio

  The bonds make semiannual payments

Harrison Co. issued 16-year bonds one year ago at a coupon rate of 7.2 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current dollar price assuming a $1,000 par value?

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