What is the current price of the stock-dividends will grow

Assignment Help Financial Management
Reference no: EM13806185

McIver, Inc. currently pays a $2 annual dividend. Investors believe that dividends will grow at 20% next year, 12% for the following year, and 6% annually thereafter. The required return is 10%. What is the current price of the stock?

A. $54.90  

B. $60.80  

C. $63.27  

D. $69.34

Reference no: EM13806185

Questions Cloud

What is the price and bond equivalent yield : A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 5.41 percent, what is the price and bond equivalent yield? Use Excel to answer this question.
Bond equivalent and discount yields on this investment : The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 per..
What is the price of the bill as a percentage of face value : A Treasury bill purchased in December 2015 has 118 days until maturity and a bank discount yield of 2.13 percent. Assume a $100 face value. What is the price of the bill as a percentage of face value?
Estimates its total variable manufacturing costs : X Company manufactures a single product and estimates its total variable manufacturing costs each month. Each unit of product requires 2.1 pounds of direct material, and the price per pound is $21.00. It takes one hour of direct labor time to manufac..
What is the current price of the stock-dividends will grow : McIver, Inc. currently pays a $2 annual dividend. Investors believe that dividends will grow at 20% next year, 12% for the following year, and 6% annually thereafter. The required return is 10%. What is the current price of the stock?
Statements regarding the efficient market hypothesis : Which of the following statements regarding the efficient market hypothesis (EMH) is incorrect?
Incorrect given the treasury quotes : Which statement is INCORRECT given the following Treasury quotes? The dealer is willing to sell this bond to you for 150.750% of par.
Correct valuation equation for this bond : Dizzy Corporation’s 10-year semi annual bond bearing a coupon rate of 12% is currently selling for $950. Given this information, which of the following is the correct valuation equation for this bond? Note: PVIFA(r,t) = [{1-1/(1+r)t}/r] and PVIF(r,t)..
Statements regarding bond trading is incorrect : Which of the following statements regarding bond trading is INCORRECT? The long-term bonds issued by the U.S. government are called Treasury Bills.

Reviews

Write a Review

Financial Management Questions & Answers

  Determinants of interest rates

The real risk-free rate is 2%. Inflation is expected to be 3% this year, 5% next year, and then 6% thereafter. The maturity risk premium is estimated to be 0.0004 x (t - 1), where t = number of years to maturity. What is the nominal interest rate on ..

  What is the investors overall profit and loss

On Dec 31 an investor longs 18 contracts of Gold with a settlement price of 1185.40. What is the investors overall profit/loss? The contract size is 100 troy oz

  Prepare all entries required to properly record the sale

On April 1, 2014, West Company purchased $450,000 of 6.00% bonds for $467,750 plus accrued interest as an available-for sale security. Interest is paid on July 1 and January 1 and the bonds mature on July 1, 2019. Prepare the journal entry on April 1..

  What is correlation coefficient between returns of two stock

The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0940. The variance of Willow is 0.1890, and the variance of Sky Diamond is 0.1210. What is the correlation coefficient between the returns of the two stocks?

  Where technical assets are being so easily replicated

Now are businesses competing with each other in this age where every company uses IT to automate its business processes to sustain in the market and where technical assets are being so easily replicated?

  What is the remaining balance on the loan after three years

Raylan Givens borrows $150,000 to buy a house. The adjustable rate mortgage carries a 1.5 percent rate for the first 3 years. After that the rate will change annually to reflect market conditions. The annual cap is 2% (i.e., the largest increase in a..

  Weighted average contribution margin per unit for lambardi

Lambardi Company sells 3 types of bags. Bag A sells for $17 and has variable cost of $9.00 per unit. Bag B sells for $12 and has variable cost of $12.00 per unit. What is the weighted average contribution margin per unit for Lambardi?­­­­­­­­­­

  Explain concept of financial intermediation

Explain concept of financial intermediation. How does the possibility of financial intermediation increase the efficiency of the financial systems?

  Profitability-liquidity-leverage and activity ratios

Include profitability, liquidity, leverage, and activity ratios for which you have data available (data may not be available for all ratios - just use what's available in the case). Present your calculations in table format.

  Made a gain or loss due to the exchange rate change

Your Boston headquartered manufacturing company, Wruck Enterprises, obtained a 50 million-peso loan from a Mexico City bank last month to fund the expansion of your Monterrey, Mexico plant. When you took out the loan the exchange rate was 10 US cents..

   Wallace Landscaping total assets

At year-end 2013, Wallace Landscaping total assets were $1.1 million and its accounts payable were $305,000. Sales, which in 2013 were $2.9 million, are expected to increase by 30% in 2014. Total assets and accounts payable are proportional to sales,..

  What is the value of the swap

A company enters into a $35 million notional principal interest rate swap. What is the value of the swap?

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