Using dividend growth model-dividend is expected to grow

Assignment Help Financial Management
Reference no: EM131056781

Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.30 per share at the end of 2013. The dividend is expected to grow at 12% per year for 3 years, after which time it is expected to grow at a constant rate of 5% annually. The company's cost of equity (rs) is 10%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2013)? Round your answer to the nearest cent. Do not round intermediate calculations.

Reference no: EM131056781

Questions Cloud

Control chart to evaluate stability : If you were to use a control chart to evaluate stability, which chart would you use? Why? What can you learn about the distribution of the installation process?
Which of the two was really wealthier : In 1913, Andrew Carnegie's net worth was approximately $475 million. In 2015, Warren Buffett’s net worth was $64.7 billion. Which of the two was/is really wealthier? Show your work.
Implementation and sustainability of the change initiative : Engaging employees in the change process can help assure successful implementation and sustainability of the change initiative. What is the best way for leaders to engage employees or other stakeholders in the change process in an organization? Wh..
Determines curriculum or what the student will learn : Why do you think there is such a difference between parent rights for students with disabilities and those without and Why does this difference exist?
Using dividend growth model-dividend is expected to grow : Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.30 per share at the end of 2013. The dividend is expected to grow at 12% per year for 3 years, after which time it is expected to grow at a constant rate of 5% annually...
The weibull cumulative distribution function : Weibull. For the Weibull cumulative distribution function, F( y)=  (a) Probability density.
Population that lives in a rural area : Crosstabulation (relative frequencies) of conflict and the % of a population that lives in a rural area.  Please round to three decimal places.
Descrive your experience working in a group : Discuss some aspect of your topic that you agree or disagree with and explain why you agree based on the results of your research (Cite facts/law you feel supports your opinion)
What is the dollar value of for the bond : There is a 6.8 percent coupon bond with eight years to maturity and a current price of $1,071.30. What is the dollar value of an 01 for the bond?

Reviews

Write a Review

Financial Management Questions & Answers

  All sales were on credit selected balance sheet amounts

Selected yearend financial statements of Cabot Corporation follow, all sales were on credit selected balance sheet amounts at December 31, 2012 were inventory; $52,900; total assets; 229,00; common stock 105,000 and retains earning 52, 548.

  Ratio interpretation

Ratio interpretation. How do capital structure ratios and liquidity ratios differ in providing insights into an organization’s ability to pay debt obligations? Identify two situations where an organization might have increasing activity ratios but de..

  Calculate trade and cash discounts-interest-interest rates

A business professional needs to easily and accurately calculate trade and cash discounts, interest, and interest rates. The list price for a radio is 22% higher than its net price. If the net price is $29.00, what is the list price? What is the amou..

  Overall cost of debt is the weighted average implied

Filer Manufacturing has 8.8 million shares of common stock outstanding. The current share price is $58, and the book value per share is $3. Filer Manufacturing also has two bond issues outstanding. Suppose the company’s stock has a beta of 1.1. The r..

  What tools does the Fed use to execute monetary policy

Let’s discuss the actual tools of the Fed. What tools does the Fed use to execute monetary policy, and how do they work in practice? Of the monetary policy tools available to the Fed, which is preferred? Why?

  What is the total annual holding cost

For SKU A3510 at the Hardware Warehouse, the order quantity has been set at 150 units each time an order is placed. The daily demand is normally distributed, with a mean of 12 units and a standard deviation of 4. It always takes exactly 5 days for an..

  Calculate the gain or loss on sale

Delta Airlines purchases a plane for $4 million, no salvage value, useful life 10 years. Using straight-line depreciation, they depreciate it 5 full years. They then sell it for $3 million. Calculate the gain or loss on sale. $_______________________..

  Sales increase-having to raise funds externally

Pierce Furnishings generated $2 million in sales during 2012, and its year-end total assets were $1.4 million. Also, at year-end 2012, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,..

  The hotel to obtain maximum protection for the equipment

Terry is a computer salesperson, she is staffing a booth at a computer expo and has bought with her approximate $30000 worth of laptops what must she do vis-a vis the hotel to obtain maximum protection for the equipment? what if she fails to do so?

  What are two types of risk that are measured by levered beta

What are the two types of risk that are measured by a levered beta? If you know the unlevered beta, how can you derive the levered beta? Select a real company and use this method to calculate its levered beta.

  Organizations build and manage prisons

Which of the following levels of government and/or organizations build and manage prisons?

  Bond equivalent yield and the effective annual return

A treasury bill with 64 days to maturity is quoted at 99.012. what is the bank discount yield, the bond equivalent yield and the effective annual return?

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