What is the current fair price of the stock

Assignment Help Financial Management
Reference no: EM131986714

Round barn stock has a required return of 7.00% and is expected to pay a dividend of 6.85 next year. Investors expect a growth rate of 4.20% on the dividends for the foreseeable future.

What is the current fair price of the stock? (Round 2 decimal places)

Suppose the stock is selling at this price, but then investors revise their expectations. The new expectation for growth rate is 2.80. If investors are rational, what will the new price for Red Barn Stock be?

New price? (Round 2 decimal places)

Reference no: EM131986714

Questions Cloud

What is your effective interest rate : McCoy’s Hardware can borrow from its bank at 17 percent to take a cash discount. What is your effective interest rate?
What should the dividend be : Moderate growth company paid a dividend last year of 2.30. If the firm has a plowback of 59%, what should the dividend be?
What is the no-growth value of the CDs stock : What is the no-growth value of the CD's stock? What is the implied P/E ratio for the CD's stock?
What is after-tax salvage value-compute the npv and irr : Compute EBIT for each year. What is the EBIT in years 1 through 6? Tax rate is 40%. What is the after-tax salvage value? Compute the NPV and IRR.
What is the current fair price of the stock : What is the current fair price of the stock? Suppose the stock is selling at this price, but then investors revise their expectations.
How long will it take you to pay off the? loan : You have an outstanding student loan with required payments of $ 550 per month for the next four years. How long will it take you to pay off the? loan? ?
What is the first payment due one month from now : What is the annual payment? what is the first payment due one month from now ?
What should the stock price be after three years : An appropriate rate of return for the stock is 11% What should the stock's price be after 3 years?
Considering new project that will require external financing : A firm is considering a new project that will require external financing. what discount rate should the firm use.

Reviews

Write a Review

Financial Management Questions & Answers

  Company has an option to abandon the project

SSC is considering another project: the introduction of a "weight loss" smoothie. The project would require a $3.2 million investment outlay today (t = 0). The after-tax cash flows would depend on whether the weight loss smoothie is well received by ..

  About the capm and portfolio return

CAPM and portfolio return-what will be the required return on your $5.5 million portfolio?

  What is terminal cash flow for this equipment

A firm is liquidating a factory. Equipment that originally cost $120,000 is being sold for $12,000 three years after its purchase. The equipment straight-line depreciated across four years. The firm needs to recover $20,00 of net working which was in..

  EBIT indifference level associated with two financing plans

Find the EBIT indifference level associated with the two financing plans.

  What is the present value of cash flow pattern

You have been offered the opportunity to invest in a project. what is the present value of this cash flow pattern?

  Construct opportunity set geometrically and algebraically

Construct your opportunity set both geometrically and algebraically. - Explain why you have drawn your indifference curves as you have drawn them.

  Currency swaps assist market participants in reducing risk

Interest rate swaps and currency swaps assist market participants in reducing risk.

  Break-even point and selling price

What selling price per unit is necessary to achieve a level of earnings before interest and taxes of $240,000?

  Order company selling high-quality sports equipment

Reeby Sports Ten years ago, in 2007, George Reeby founded a small mail-order company selling high-quality sports equipment.

  The nominal interest rate paid by comparable investments

You have the opportunity to purchase a commercial bond. The face value of the bond is $1000 and the bond interest rate is 10%. the bond pays interest every six months and will mature after five years. Compute the highest price that should be paid for..

  What percent of total portfolio is invested in each asset

If a portfolio of these two assets has beta of .6, what are the portfolio weights (i.e. what percent of the total portfolio is invested in each asset)?

  Calculate usher sports shop cash flow from operations

Calculate Usher Sports Shop’s cash flow from operations for 2015.

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