What is estimate of stocks current value

Assignment Help Financial Management

Reference no: EM131051650

Agarwal Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a rate of 50% in year 4, and 25% in year 5, and then to increase it at a constant rate of 8.00% thereafter. Assuming a required return of 11.00%, what is your estimate of the stock's current value?

Reference no: EM131051650

Questions Cloud

Investments in government securities : A superannuation fund can earn j1 = 10% p.a.with investments in government securities. Determine which of the following investments the fund should accept if the initial investment required is $100,000 in each case.

Determine the effective annual rate of return : An engineer deposits $540 each month into a retirement account. After 30 years, the balance in the account is $1.9 million. Determine the effective annual rate of return for this account. Express your answer in % (not decimal) to the nearest 0.1%.

What is the yield to maturity of bond : A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par value. The bond has a coupon rate of 6 percent paid annually and matures in 16 years. What is the yield to maturity of this bond?

What is the holding period yield on your investment : The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). (B) Two years from now, the YTM on yo..

What is estimate of stocks current value : Agarwal Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Assuming a required return of 11.00%, what is your estimate of the..

Changes between now and when the options expire : What is your net profit or loss from this exchange assuming nothing changes between now and when the options expire?

Questions managers typically ask during interviews : The two purposes here are to illustrate the types of questions managers typically ask during interviews and to practice answering such questions in a safe environment.

Question regarding the geometric average return : 1) If Sterling Corp's next dividend of preferred stock is $15 per share and is expected to grow by 3% per year, what must be the discount rate on preferred shares if shares are currently selling for $50 per preferred share? 2) If the annual return..

Austerity measures designed to restore financial solvency : Which of the following multilateral institutions often insists that a country follow "austerity measures" designed to restore financial solvency as a condition of receiving a loan? Which of the following multilateral institutions often insists that a..

User Account

All Pages