Using the constant growth model for stock valuations

Assignment Help Finance Basics

Reference no: EM1358915

The Kummins Engone Company common stock has a beta of 0.9. The current risk-free rate of return is 5 percent and the market risk premium is 8 percent.

The CEO of the company is quoted in a press release as saying that the firm will pay a dividend of $0.80/share in the coming year and expects the dividends to grow at a constant rate of 7 percent for the foreseeable future. Using the constant growth model, what value would you assign to this stock?

Reference no: EM1358915

Questions Cloud

Program to overload the addition assignment operator : Overload the addition assignment operator (+=), the subtraction assignment operator (-=), and the multiplication assignment operator (*=).

Industrial-organization psychologist : If you work as an Industrial-Organization psychologist to give advice to electronic industries, what suggestions would you make?

Recognized gross profit on installment sale : Kyle sold land on the installment basis for $100,000. His basis in the land was $70,000. Kyle received a $40,000 down payment and a real estate installment sale contract calling for $60,000 in additional payments in future years.

What is the problem of childhood obesity : Child Obesity - What is the problem of childhood obesity, make recommendations for prevention and treatment. Why it is on the rise.

Using the constant growth model for stock valuations : The Kummins Engone Corporation common stock has a beta of 0.9. The current risk-free rate of return is 5% and the market risk premium is 8%.

Create state transition diagram to describes student states : Create a state transition diagram that describes typical student states and how they change based on specific actions and events.

Statements of taxpayers and accounting periods : Which of the following statements is true? Once adopted, an accounting period normally cannot be changed without approval by the IRS.

Theory of cognitive functioning : Explain how the results of "The Nun Study" are substantiated by the "Use It or Lose It" theory of cognitive functioning.

Managing teams : Overall performance of the team and make two recommendations for how that impact could be mitigated. Provide specific examples to support your response.

User Account

All Pages