What is a reasonable estimate for the share price

Reference no: EM131961076

Question: You are considering the purchase of a share of stock. In the most recently reported fiscal year Earnings per Share (EPS) were $2.15. You expect earnings to grow at 0.75% per year into the future, and you require a return of 7.50% on the investment. Using a Gordon Growth Model, what is a reasonable estimate for the share price?

Reference no: EM131961076

Questions Cloud

Should you make the investment : Calculate the NPV of this investment opportunity if your cost of capital is 8.6%. Should you make the investment? Calculate the IRR and use it to determine.

For what price must you sell the property : You are considering purchase of a property for 250,000 with a 70,000 down payment. Cash flows will be $4,000 every year for 20 years and will grow 4% a year.

What is the most you would be willing to pay : You are considering the purchase of a share of Alfa Growth, Inc. common stock. You expect to sell it at the end of one year for $64.50 per share.

Show the cash flows of an old machine for each period : You are considering the replacement of an old machine that has a current book value of $7,000 and a market value of $9,000.

What is a reasonable estimate for the share price : You are considering the purchase of a share of stock. In the most recently reported fiscal year Earnings per Share (EPS) were $2.15.

What is the npv of the investment project : You are considering an investment project with a cost of $10,000 that promises the cash flows of $2000 at the end of year 1, $2500 at the end of year 2, $3000.

How much interest will you need to earn : How much interest will you need to earn every six months to match the CD? First convert APR into a monthly discount rate.

What is the payback period of the investment : You are considering making a movie. The movie is expected to cost $11 million upfront to make. The movie will produce cash flows of $4 million in one year.

Calculate the expected annual average rate : Calculate the expected annual average rate of appreciation on home equity for the next 3 years, using both the "arithmetic" and the "geometric".

User Account

All Pages