What is present value of growth opportunities for verizon

Assignment Help Financial Management

Reference no: EM132002561

Evaluate Verizon (VZ) common stock. The current price of VZ is $44.20 per share. Last year, earnings were $4.32 per share and dividends paid were $2.60 per share. The beta of VZ is 0.88; the long term expected constant growth rate for VZ is 3.0%. The trailing (ttm) P/E ratio is equal to 10.23. The risk-free rate is 2.8% (10 year Treasury) and expected market risk premium is 5.70% The tax rate for VZ is 32%.

a) What is the forward P/E ratio for Verizon?

b) What is the present value of growth opportunities for Verizon?

c) What is the required rate of return on VZ stock according to the CAPM?

d) What is the expected rate of return on VZ stock according to the dividend growth model, using the current (market) stock price of $44.20?

e) Is VZ stock overvalued or undervalued? Explain (briefly).

Reference no: EM132002561

Questions Cloud

What is a business driver : What is a business driver? What are technology drivers and what is their impact on projects?

Sketch a time line of the dividend stream : Sketch a time line of the dividend stream. Estimate the intrinsic value of firm X’s shares today.

How would an attacker break a caesar-style cipher : Although the Caesar cipher is easy to use, it is easy to crack. How would an attacker break a Caesar-style cipher?

Addressing the challenges of the health care industry : Continuous quality improvement (CQI) is the responsibility of all nurses and is vital when addressing the challenges of the health care industry.

What is present value of growth opportunities for verizon : What is the present value of growth opportunities for Verizon?

Describe the purpose of database filegroups : Describe the purpose of database filegroups and examine the key ways it helps with minimizing administration to backups or with multiple databases.

How many units should be shipped from each manufacturing : How many units should be shipped from each manufacturing facility to each of the retail stores if cost is to be minimized? What is the total cost?

What role does it play in promoting agendas : How does the Web impact society today. What role does it play in promoting agendas, communication, services or selling products?

Explain the facts of the case leading to the dispute : Explain the facts of the case leading to the dispute.

User Account

All Pages