What is nvidia required rate of return

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Nvidia Corp. (NVDA) trades for $800 a share, has current earnings per share of $6.90, a plow-back ratio of 95%, and a beta of 1.47. The risk-free rate is 1% and the market risk premium is 5%.

(a) What is Nvidia's required rate of return?

(b) Using the Gordon Growth Model, what growth rate is implied by the current market valuation of Nvidia?

(c) Your own analysis of the GPU industry shows that Nvidia's actual growth rate will be 8.32%. Based on this analysis, you buy Nvidia today. Tomorrow, news comes out and the rest of the market comes to agree with your predicted growth rate, which becomes reflected in Nvidia's stock price. What was your holding period return (HPR) between today and tomorrow (no need to annualize, just report the HPR)?

Reference no: EM133110171

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