Value per share of your firm stock

Assignment Help Financial Management
Reference no: EM131838767

Nonconstant Growth Stock Valuation Assume that the average firm in your company's industry is expected to grow at a constant rate of 7% and that its dividend yield is 5%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50% [D1 = D0(1 + g) = D0(1.50)] this year and 30% the following year, after which growth should return to the 7% industry average. If the last dividend paid (D0) was $1.25, what is the value per share of your firm's stock? Round your answer to the nearest cent. Do not round your intermediate computations.

Reference no: EM131838767

Questions Cloud

What will be the maximum inventory level : ABC Co. can manufactures a subcomponent at the rate of 700 per day when required. Its annual demand for this item is 80000 units.
Set up a format for identifying technology : This technology should provide the opportunity to be advantageous, useful and durable for the people who buy into it.
Which data structure should be used for the given operations : Extract the event with smallest time-stamp (that is, determine the next event to process). Which data structure should be used for the above operations? Why?
Segregation between religious and ethnic minorities : From 1400 to 1700, how did many societies indulge in conducting segregation between religious and ethnic minorities.?
Value per share of your firm stock : Your company's industry is expected to grow at constant rate of 7% and that its dividend yield is 5%. what is the value per share of your firm's stock?
How will tailored sourcing affect the production and profits : Snoblo, a manufacturer of snowblowers, sells four models. The base model, Reguplo, has demand that is normally distributed, with a mean of 10,000.
Particular moral-ethical dilemma : Compose a 2-page, accompanied by a 2-minute narrated slide presentation that describes a particular moral-ethical dilemma that you encountered
What is the output from the given sequence of priority queue : What is the output from the following sequence of priority queue ADT methods: insert(5,A), insert(4,B), insert(7,I), insert(1,D), removeMin(), insert(3,J).
What is truth in advertising : Read the article,"Truth in Advertising" by Carol Rados. How do you know when an organization is over promoting a service or product?

Reviews

Write a Review

Financial Management Questions & Answers

  Leather-cutting machine to replace an existing machine

Topsider Inc. is considering the purchase of a new leather-cutting machine to replace an existing machine that has a book value of $3000 and can be sold for $1500. The old machine is being depreciated on a straight-line basis, and its estimated salva..

  Calculate the cost of purchasing the equipment with debt

Reynolds Corporation plans to purchase equipment at a cost of $3 million. The company's tax-rate is 30 percent and the equipment's depreciation would be $600,000 per year for 5 years. If the company leased the asset on a 5-year lease, the payment wou..

  Consumer-centered approach health care organizations

Competition and a Consumer-centered Approach Health care organizations must make strategic and well-informed decisions on how to approach the market. Many health care leaders recognize that they can achieve organizational goals when they choose to se..

  Using the marginal tax rates from your book

Kyle has been asked to serve as a consultant on a building project and can get paid his fee up-front or at the end of the long project. He has agreed to do the consulting work for a fee of $20,000. Using the Marginal Tax Rates from your book (pp. 106..

  Explain the tax consequences

Your client supplies water to a housing development. The company requires new customers to pay for the extension of the water lines to their homes. The water lines are the company's property. The client would like you to explain the tax consequences ..

  Firms degree of transaction exposure in particular currency

What factors affect a firm's degree of transaction exposure in a particular currency? For each factor, explain the desirable characteristics that would reduce transaction exposure.

  Compute payback statistic for project-cost of capital

Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years.

  Present value break-even point-initial investment-tax rate

Calculate the present value break-even point. Initial Investment: $700 Fixed Cost: $200 per year Variable Cost: $4 per unit Depreciation: $140 per year Price: $8 per unit Discount Rate: 12% Project Life: 3 years Tax Rate: 34% . A. 68 units per year B..

  What is growth company cost of preferred stock

Growth? Company's current share price is $19.85 and it is expected to pay a $1.20 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.5% per year. What is an estimate of Growth Company's cost of equity? ..

  Using the correct data to get accurate forecasts

How do managers know they are using the correct data to get accurate forecasts?

  Does fair value accounting fairly portray economic situation

Does fair value accounting fairly portray the economic situation of a company or does it unfairly exacerbate any short-term problems a company is having? Why?

  Regulated public utility

Reliable Electric is a regulated public utility, and it is expected to provide steady dividend growth of 5% per year for the indefinite future. Its last dividend was $5 per share; the stock sold for $50 per share just after the dividend was paid. Wha..

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