What is estimated per share value of sbux

Assignment Help Business Management
Reference no: EM132681694

You wish to determine the value of Starbucks' common stock (ticker symbol SBUX) using the dividend discount model approach. You collect the following data:

SBUX's current annual dividend $1.44/share

SBUX's beta to the broad market .65

Market risk premium for US stocks 7.7%

Risk free rate 1.8%

You further determine SBUX's dividend growth rate for the past five years has been 11.4% per annum and you expect that growth rate to continue for the coming year. However, you expect that growth rate to fall to 8% p.a. in years 2 and 3 before settling at 5% p.a. thereafter.

(i) What is your estimated per share value of SBUX?

(ii) Assuming SBUX was currently trading at $75/share, and leaving your growth rate assumptions for years 1 through 3 unchanged, what approximate terminal growth rate assumption would be required to have your DDM model produce this price?

Reference no: EM132681694

Questions Cloud

What is the required rate of return-bland inc : If the current value of the firm's shares based on the constant growth model is $28.37, what is the required rate of return?
What is the present value of growth opportunities : Clean Look Paints has a current market value of $43.75/share with earnings of $3.59. What is the present value of growth opportunities (PVGO) if the required ra
Estimate of gg intrinsic value per share : GG's market capitalization rate is 15% per year. What is your estimate of GG's intrinsic value per share?
Find the price at which visual effects stock should sell : The market consensus is that Visual Effects Corporation has an ROE of 9%, has a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio
What is estimated per share value of sbux : You wish to determine the value of Starbucks' common stock (ticker symbol SBUX) using the dividend discount model approach. You collect the following data:
What is abc company pre-tax cost of debt : The firm just issued new debt at par with a coupon rate of 6.5%. What is ABC Company's pre-tax cost of debt? Enter your answer as a percentage.
What is the alpha of the cat bond : You are considering an investment in a CAT bond. The CAT bond will mature in one year and will pay the face value of $100 with probability of 98%
What is the annualized cost of the bank? loan : If Paymaster plans to borrow ?$110,000 for a period of 2 ?months, what is the annualized cost of the bank? loan?
Calculate the annualized cost of the trade credit terms : Calculate the annualized cost of the trade credit terms of 4?/15?, net 60 when payment is made on the net due date? (assume a? 365-day year).

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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