Using the non-constant growth model

Assignment Help Financial Management

Reference no: EM13922983

Using the Non-Constant Growth Model, calculate the (intrinsic) value of a stock paying the following dividend and with the given values for the 'required rate of return' ( or 'r') and assumed constant growth rate (or 'g'). The non-constant growth period is 4 years.

t=o dividend: $7.50 per year

Non-constant growth rate: 18.0% per year

Constant growth rate 7.0% per year after the non-constant growth period

Required rate of Return: 12.6%

Final answer here: _________this should be a per-share value rounded to the nearest cent.

Reference no: EM13922983

Questions Cloud

Raise capital by issuing bonds to the public : Put together a memo to your Board of Directors, as the Company's CFO, which describes some of the risks associated with your Board's plans to raise capital by issuing bonds to the public. Be sure to include the effects of inflation as well as provide..

Identify the problem related to the sale, trade, or donation : Identify the problem related to the sale, trade, or donation of human organs. Persuade theaudience that you have selected that this is a problem that needs solving; give it presence. Propose action offering specific details to show how the actions wi..

Determine amounts of non operating assets-financial claims : Determine the amounts of non operating assets and financial claims related to the retiree health and life benefits plans and pension plans that would be included in a valuation of GE.

What is its expected return : Expected Return If a company's current stock price is $25.40 and it is likely to pay a $1.15 dividend next year. Since analysts estimate the company will have a 12% growth rate, what is its expected return?

Using the non-constant growth model : Using the Non-Constant Growth Model, calculate the (intrinsic) value of a stock paying the following dividend and with the given values for the 'required rate of return' ( or 'r') and assumed constant growth rate (or 'g'). The non-constant growth per..

Long-term instruments is determined largely independently : Which yield curve theory is based on the premises that financial instruments of different terms are not substitutable and therefore the supply and demand in the markets for short-term and long-term instruments is determined largely independently?

Discuss the significance of informal communication : Describe the functions of communication. Discuss the significance of informal communication and specifically the impact of the "grapevine" on culture, transparency, and sharing of information. Provide your insights on the process of feedback and gett..

What is the coeffient of variation of an investment : You received a dividend of $6.68 this morning and are attempting to decide if you should hold onto this stock. You expect this stock to grow at 14% for 3 years. After that, you think they will grow at 13%. Given the level of risk, you need a return o..

Capital budgeting analysis due to the effects of inflation : Which one of the following categories would be least likely to require annual adjustments in a capital budgeting analysis due to the effects of inflation?

User Account

All Pages