User Account

All Pages

What is estimated per share value of sbux

Assignment Help Finance Basics
Reference no: EM132816137

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: EM132816137

Questions Cloud

Cash flow to stockholders for the year : If the company paid out $610,000 in cash dividends during 2018, what was the cash flow to stockholders for the year?
Discussion on what blockchain is : This week's discussion centers around the concept of Blockchain. There is still much confusion regarding what Blockchain is and what it is not.
Explain why the use of large dollar balances as the basis : Explain why the use of large dollar balances as the basis for selecting accounts payable for confirmation might not be the most effective approach for the audit
Determine the expected alpha of security : Using this data and the Fama-French model, determine the expected alpha of this security.
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 amount of borrowing costs that will be capitalized : IAS 23 - Borrowing Costs, What is the amount of borrowing costs that will be capitalized to the machine when it is received on December 31, 20x3?
How has the term hacking changed meaning over the years : With all the stories about millions and millions of bytes of personal data having been exposed, why is their still any faith at all in the Internet?
What is the price of bond today : Bond X is a premium bond making semiannual payments. The bond pays 9 percent coupon, has a yield to maturity (YTM) of 6.5 percent and has 14 years
Calculate minimum taxable capital gain that giang include : The original cost of the land was $100,000. Calculate the minimum taxable capital gain that Giang will include in income for tax purposes for 2019 and 2020.

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the service cost and the interest cost components

Annual retirement benefit equals years of credited service 3 0.02 3 highest salary. You have the following information for Frank Bullitt, the firm's.

  How many units must be ordered in november

Projected sales for October, November, and December are 27,000 units, 29,500 units, and 32,500 units, respectively. How many units must be ordered in November?

  Estimate the company wacc-marshall inc

To estimate the company's WACC, Marshall Inc. recently hired you as a consultant. You have obtained the following information. (1) The firm's noncallable bonds

  Practice approach to balance sheet management

Give an example of how you would use a best practice approach to balance sheet management, giving careful consideration to management of asset/liability risks and returns in concert with one another.

  What is the value of baxter stock per share

Calculate the intrinsic value of Baxter's stock, using the formula Vop = FCF0(1+g)/WACC - g. Based on your calculations, what is the value of Baxter's stock per

  What will happen to the operating cash flows

You are in charge of a project that has a degree of operating leverage of 2.64. What will happen to the operating cash flows if the number of units you sell increase by 4 percent?

  What is the payback period

The Love Living In Paradise Company wants to calculate how long it will take to recover their initial investment on a project.

  Good to use for a competitor ratios and analysis

What are two comparable competitors for Alere now Abbott, that would be good to use for a Competitor's ratios and analysis?

  The information provided in the proforma statement

Assignment: Based on the information provided in the proforma statement attached below, compute the Net Present Value, the Internal Rate of Return, the Cash Payback and the Accounting Rate of Return (CO 6). (Hint: Depreciation is not a cash item)

  Amount of interest on the debt

A firm is analyzing two possible capital structures 30 and 50 percent debt ratios. The firm has total assets of $5,000,000 and common stock valued

  Determining the average annual return

Ignoring taxes, what is your annualized geometric return over this two-year period? What is you average annual return?

  Calculate the market value of bond

A 10-year bond, with par value equals $1000, pays 10 percent yearly. If similar bonds are currently yielding 6 percent yearly, calculate the market value of the bond.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd