What are the expected dividend yield and capital gains

Assignment Help Finance Basics
Reference no: EM13288349

Assume that a corporation is a constant growth company whose last dividend (D0, which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 6% rate. The discount rate is 13%. What is the firm's expected dividend stream over the next 3 years? What is the firm's current stock price? What is the stock's expected value one year from now? Now assume that the stock is currently selling at $30.29. What is its expected rate of return? Now assume that corporation's dividend is expected to experience supernormal growth of 30% from Year 0 to Year 1, 20% from Year 1 to Year 2, and 10% from Year 2 to Year 3. After Year 3, dividends will grow at a constant rate of 6%. What is the stock's intrinsic value under these conditions? What are the expected dividend yield and capital gains yield during the first year?

Reference no: EM13288349

Questions Cloud

Define the role of a spin vane or boiling stones : Explain the role of a spin vane or boiling stones that are added to a liquid that is to be heated or distilled
Calculate how much work is done on the capacitor : A large parallel plate capacitor has plate separation of 0.85 cm and plate area of 391 cm2. How much work is done on the capacitor as the plate separation is increased to 1.70 cm
What is the bonds nominal yield to call : Walker Industries has a bond outstanding with 12 years to maturity, a 9% coupon paid semiannually, and a $1,000 par value. The bond has a 7% nominal yield to maturity, but it can be called in 3 years at a price of $1,045. What is the bond's nomina..
Explain what concentration of sodium chloride in water : What concentration of sodium chloride in water is needed to produce an aqueous solution isotonic with blood (blood, pi=7.70 atm at 25 degree C)
What are the expected dividend yield and capital gains : After Year 3, dividends will grow at a constant rate of 6%. What is the stock's intrinsic value under these conditions? What are the expected dividend yield and capital gains yield during the first year?
Calculate the frequency of the tuning fork : The temperature of the air in a resonator is 15°C, when a tuning fork vibrates at one end, calculate the frequency of the tuning fork
Explain why should you never heat a cooled system : Why should you never heat a cooled system, and how does this rule apply to distillation
What the company obligations are as a result of transaction : The system schedules the development of the software by assigning a timeline and allocating personnel to the project. The development will take 3 weeks.
Obtain the capacitance of the system : Two conductors having net charges of +15.0 µC and -15.0 µC have a potential difference of 15.0 V between them, obtain the capacitance of the system

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the semi-annual coupon payment for the bond

Calculate the Semi-annual coupon payment for the bond and semi-annual and annual coupon rate

  Objective question related to finance

If you invest $750 every six months at 8 percent compounded semi-annually, how much would you accumulate at the end of 10-years?

  What will be the total deposits in long run

The total reserves are $50 million and current reserve requirement is 7% reserve. If the Fed decreases reserve requirements by 1% then what will be the total deposits in long run?

  Wealth management question

If market interest rates are currently 15 percent and your investment provides you this 15 percent return, does that imply that you are 15% more wealthy.

  What is the pv of your project

Given the above information about PhelpCo, what is the appropriate discount rate that should be applied to the cash flows of your project?

  Estimating debit cost of capital

Write down the two methods for estimating debit cost of capital, and what do you do when there's default risk?

  What circumstances should photosynthesis take on the project

Photosynthesis, Inc. is considering a project that will result in initial after-tax cash savings of $2 million at the end of the first year, and these savings will grow at a rate of 6% per year indefinitely.

  What estimate can he make of the real rate of return

On the basis of the information that Carl has collected, what estimate can he make of the real rate of return?

  How will individual health insurance change in 2014

How will individual health insurance change in 2014 now that the Supreme Court decision deemed the 2010 health-care-reform law as constitutional?

  What is the implied growth rate of the federal express

What is the implied growth rate of the Federal Express dividend based on the constant growth dividend discount model? Assume the required rate of return is 10% and price is 5000 for 100 share. Current dividend is 3.40 show your steps?

  What is the yield that trevor would earn

The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,081.82, what is the yield that Trevor would earn by selling the bonds today?

  Determine effective rate of payment

Commercial paper is usually sold at a discount. Company A has just sold an issue of ninety day commercial paper with a face value of 1 million dollar.

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