The market is in equilibrium

Assignment Help Financial Management

Reference no: EM132020540

Constant growth

You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 6.0%. Justus currently sells for $50.00 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 ?) Round your answer to two decimal places. Do not round your intermediate calculations. $

Reference no: EM132020540

Questions Cloud

Additional cash flows associated with termination of project : what is the free cash flow in year 10 plus any additional cash flows associated with termination of the project.

Calculate the payback period for this project : Calculate the IRR for this project. Calculate the payback period for this project.

What is the expected return on well-diversified portfolio : What is the expected return on a well-diversified portfolio with a standard deviation of 8.2 percent?

Preferred stock valuation : Preferred stock valuation Earley Corporation issued perpetual preferred stock with a 11% annual dividend. What is its new market value?

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

Common shareholders equity with some numbers missing : The following is a statement of common shareholders’ equity with some numbers missing.

Buying vs. leasing a vehicle : To compare costs of buying or leasing an automobile or other vehicle. This analysis should compare two situations with comparable payment amounts,

Calculate the annual worth of defender at an interest rate : Calculate the annual worth of the defender at an interest rate of 10% oer year. Determien the AW of the challenger over 3 years and select it or the defender.

Assess their risk tolerance-discuss investment constraints : Estimate their return objective. Assess their risk tolerance. Discuss their investment constraints.

User Account

All Pages