What is required rate of return on your company stock

Assignment Help Financial Management

Reference no: EM131539499

Assume that the average firm in your company's industry is expected to grow at a constant rate of 6% and that its dividend yield is 8%. Your company is about as risky as the average firm in the industry and just paid a dividend (D0) of $2.5. You expect that the growth rate of dividends will be 50% during the first year (g0,1 = 50%) and 30% during the second year (g1,2 = 30%). After Year 2, dividend growth will be constant at 6%. What is the required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM131539499

Questions Cloud

Research comair flight 5191 and review the video : Discuss the human error in this accident and created a Causation Model to break the cause.

Should you take the lump sum or opt for the yearly payments : Should you take the lump sum or opt for the yearly payments?

Write a summary of how crm was used with the airliner : Write a Summary of how CRM was used with the airliner and explain the ARS examples.

Prepare budgeted income statements for each month : Lilliput, a one-product mail-order firm, buys its product for $60 per unit and sells it for $130 per unit. The sales staff receives a 10% commission.

What is required rate of return on your company stock : What is the required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock?

Retirement to pay for the houseboat : How much will Jon need at retirement to pay for the houseboat and to provide his desired yearly income of $150,000/year.

Why is there cost associated with reinvested earnings : What sources of capital should be included when you estimate Jana's weighted average cost of capital? Why is there a cost associated with reinvested earnings?

Prepare a table that shows the computation of bei : All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sale, 30% in the month after the sale, 48%.

What is meant by invisible support : What is meant by invisible support? Give an example other than the one listed in the text that you will use in your future career.

User Account

All Pages