Valuation of constant growth stock

Assignment Help Financial Management

Reference no: EM131070902

Valuation of a constant growth stock

A stock is expected to pay a dividend of $2.00 the end of the year (that is, D1 = $2.00), and it should continue to grow at a constant rate of 8% a year. If its required return is 12%, what is the stock's expected price 1 years from today? Round your answer to two decimal places.

Reference no: EM131070902

Questions Cloud

Unrestricted cash classified within current assets : Companies typically report compensating balances that are required under a loan agreement as unrestricted cash classified within current assets. a. For purposes of financial statement analysis, is this a useful classification? Explain. b. Describe ho..

When valuing stock with the dividend discount model : When valuing stock with the dividend discount model, the present value of future dividends will:

What is the weight of the preferred stock : The Auto Group has 1,000 bonds outstanding that are selling for $840 each. The company also has 8,300 shares of preferred stock at a market price of $65 each. The common stock is priced at $60 a share and there are 29,000 shares outstanding. What is ..

The before-tax cost of debt and rd : If a firm can shift its capital structure so as to change its weighted average cost of capital (WACC), which of the following results would be preferred? The before-tax cost of debt, rd, is the same as the

Valuation of constant growth stock : A stock is expected to pay a dividend of $2.00 the end of the year (that is, D1 = $2.00), and it should continue to grow at a constant rate of 8% a year. If its required return is 12%, what is the stock's expected price 1 years from today?

Which of the cash flows are incremental cash flows : Which of the following cash flows are incremental cash flows that need to be considered when evaluating a capital project?

Discount bond making semiannual payments : Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 10 percent, has a YTM of 8 percent, and has 16 years to maturity. The Modigliani Company has a discount bond making semiannual payments. Price of Miller Corpo..

Financial decisions regarding this capital budgeting project : Please also explain how the financial decisions regarding this capital budgeting project are related to management, marketing or operations decisions that the company must make (or has made) in light of the plans to open the new line of stores, i.e.,..

What is the spot exchange rate : Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In the U.S., 90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return. In the 90-day forward market, 1 Br..

User Account

All Pages