What is current intrinsic value

Assignment Help Financial Management
Reference no: EM131060775

Goodwin Technologies is a relatively young company. Goodwin has been widly successful, but it has yet to pay a dividend. An analyst has forecasted that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $2.50 dividend at that time (D3 - $2.50), and believes the dividend will grow by 30% for the following two years (D4 and D5). However, after five years, she expects Goodwin's dividend to grow at a constant rate of 7% per year. 1) If Goodwin's required return is 11.9%, what is Goodwin's current intrinsic value?

Reference no: EM131060775

Questions Cloud

Remaining unbiased no matter the task : Conduct all actions in an expert and exemplary manner, to cultivate skill and reputation. Always provide the most prompt, meticulous and detailed service possible. Truthfulness, in both action and intent. Remaining unbiased, no matter the task, when ..
Plot a graph of the stress sa at point a as a function : Plot a graph of the angle b, which locates the neutral axis nn, as a function of the angle a. (When plotting the graphs, let a vary from 0 to 10°.) (Note: See Table E-1 of Appendix E for the dimensions and properties of the beam.)
Amount of club purchases in dollars : If the yearly fee for a warehouse club membership is $100 and the reward rate is 2% on club purchases for the year, write the linear equation that models the actual yearly cost of the membership y, in dollars. Variable x should represent the yearl..
Implications of a study on dvt : Using established guidelines, critique the data collection, analysis, ad implications of a study on DVT/PE.
What is current intrinsic value : Goodwin Technologies is a relatively young company. Goodwin has been widly successful, but it has yet to pay a dividend. An analyst has forecasted that Goodwin is likely to pay its first dividend three years from now. However, after five years, she e..
What is the bonds yield to maturity : A 25-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 9.30%. What is the bond’s yield to maturity if the bond is selling for $1,030? What is the bond’s yield to maturity if the bond is selling for $1,..
Different possible distributions : A student wishes to allocate her study time among a mathematics, english, and German. Suppose that she has a total of 18 hours of study time a week, and decides to spend 4 times as much time on mathematics as she spends on english. How could she d..
Why is important for humans to be able to reproduce and grow : Why is it important for humans to be able to reproduce and grow? What would happen if we didn't have this property? Why in your opinion are these the most important?
Develop a petri net system that captures all the processes : IAB201 - Modelling Information Systems - Develop a Petri net system that captures all the processes in the proposed scenario description and discuss limitations of Petri nets that you have experienced when capturing the proposed scenario description..

Reviews

Write a Review

Financial Management Questions & Answers

  Explain what would be the amount of the equity

Based on your answer in (c), what would be the amount of the equity up front that you would have to give up in order to obtain LipLife's original venture capital investment?

  What is the portfolios expected return

A portfolio is invested 19 percent in Stock G, 34 percent in Stock J, and 47 percent in Stock K. The expected returns on these stocks are 8.5 percent, 11 percent, and 16.4 percent, respectively. What is the portfolio’s expected return?

  About the current bond price

Great Wall Pizzeria issued 8-year bonds one year ago at a coupon rate of 6.1 percent. If the YTM on these bonds is 7.5 percent, what is the current bond price?

  What is the effective annual yield

PK Software has 9.2 percent coupon bonds on the market with 23 years to maturity. The bonds make semiannual payments and currently sell for 112.25 percent of par. a.) What is the Current yield on PK's bonds? b.)What is the YTM c.) What is the effecti..

  What is the expected inflation rate

Using the expectations theory, what is the yield on a 1-year bond, one year from now? Calculate the yield using a geometric average. What is the expected inflation rate in Year 1?

  Free cash flow for the most recent year

Manzell Corp.'s free cash flow (FCF) for the most recent year is $470 (million). FCF is expected to grow by 18% next year, by 11% the year after that, and by 3% per year thereafter. Manzell's WACC is 10%. The estimated enterprise value is $__________..

  Regard to payroll and accounts payable functions

Sasha Company allocates the estimated $196,400 of its accounting departments costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable fun..

  What gross rate per unit of coverage should be charged

Carolyn is senior vice president of finance and chief actuary for Rock Solid Insurance Company (RSIC). Lonnie is double-majoring in finance and mathematics at State University. What was the company's policyholders' surplus? The pure premium per unit ..

  Equity discount rate must firm be using to value acquisition

Anacott Steel is acquiring Terafly Incorporated. Terafly is expected to provide Anacott with operating cash flows of $12, $21, $16, and $9 million over the next four years, respectively. In addition, the horizon value of all remaining cash flows at t..

  Long-term exchange rate risk

Discuss the topic:"Does Purchasing Power Parity (PPP) eliminate concerns about long-term exchange rate risk?" One of the most popular and controversial theories in international finance is the Purchasing Power Parity Theory, which attempt to quant..

  Spiral staircase is offering perpetual preferred stock

Spiral Staircase is offering perpetual preferred stock which is commonly referred to as 10-10 stock. This stock will start paying an annual dividend of $10 a share starting 10 years from now, continuing forever. What is this stock worth to you today ..

  Investment to cover cost of your childs college education

Assume the total cost of a college education will be $410,000 when your child enters college in 15 years. You presently have $68,000 to invest. Required: What annual rate of interest must you earn on your investment to cover the cost of your child’s ..

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