What is the current value of one share of stock

Assignment Help Financial Management

Reference no: EM131538234

1. The Red Bud Co. just paid a dividend of $1.20 a share. The company announced today that it will continue to pay this constant dividend for the next three years after which time it will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 8%?

A. $3.09

B. $3.15

C. $3.23

D. $3.44

E. $3.60

2. The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next four years and then decreasing the growth rate to 5% per year. The company just paid its annual dividend in the amount of $1.00 per share. What is the current value of one share of this stock if the required rate of return is 10.25%?

A. $33.03

B. $38.19

C. $41.05

D. $43.19

E. $45.81

Reference no: EM131538234

Questions Cloud

Cost of Equity-CAPM : Cost of Equity-CAPM: calculating the Cost of Equity using the CAPM model. Can the Cost of Equity be less than the Risk-free rate? Why? or Why not?

Calculate the price of three-month european put option : Calculate the price of a three-month European put option on a non-dividend-paying stock with a strike price

Expected return and volatility of portfolio consisting : What is the expected return and volatility of a portfolio consisting of 71 %71% Ford Motor stock and 29 %29% of Molson Coors Brewing? stock?

Write about cost-volume-profit analysis : Write about Cost-volume-profit (CVP) analysis with examples in 6 pages including:

What is the current value of one share of stock : What is the current value of one share of this stock if the required rate of return is 10.25%?

Find the net proceeds from the sale of the bond : Find the net proceeds from the sale of the bond, Nd. Calculate the bond's yield to maturity (YTM ) to estimate the before-tax and after-tax costs of debt.

What are the cash flows-NPV and IRR : What are the cash flows? What is the NPV and IRR? Should you buy the system?

Determine the marginal cost to extend service : Determine the marginal cost to extend service for each of the next 6 years if the MARR is 10%.

What is the aftertax cash flow from the sale of this asset : If the relevant tax rate is 35 percent, what is the aftertax cash flow from the sale of this asset?

User Account

All Pages