User Account

All Pages

What is the intrinsic value for the given share of stock

Assignment Help Finance Basics
Reference no: EM131959612

Question: A company's earnings are expected to grow at 5% per year for the next 4 years, then stabilize at a 3% growth rate from then on. The company's most recent dividend is $1 (D0). If the required return for an investment of this type is 10%, what is the intrinsic value (fair price) for this share of stock?

(Note: this is called a supernormal growth of stock, using Gordon's Growth Model with at least two levels of growth before assuming a constant growth rate. Apply additivity of time value of money.)

Reference no: EM131959612

Questions Cloud

Calculate the dividend yield for the stock : Company x is expected to pay an end-of-year dividend of $5 a share on its common stock. After the dividend payment the stock is expected to sell at $110.
How much funds are the company actually going to collect : A company wants to issue a SGD 100 million 10-year straight bond, with a coupon of 5.5% paid semi-annually. The market interest rate for companies of similar.
What is the payback period of the project : Company XYZ has spent $250,000 to develop a new product - smart beehive. The company has spent $24,000 for a market research for figuring out the expected.
What was the net in one amount for the year : During the year the company earned revenue of $6,400, all of which was received in cash, and incurred expenses of $3,700, all of which was unpaid as of the end.
What is the intrinsic value for the given share of stock : A company's earnings are expected to grow at 5% per year for the next 4 years, then stabilize at a 3% growth rate from then on.
Statement provide measure of firm cash flows : Why doesn't an income statement provide a measure of a firm's cash flows?
Evaluate the return on equity : A company has taxable income of $1,760 with a tax rate of 38 percent. Owners equity is: $400 in stock, $200 in capital surplus, and $200 in retained earnings.
What is the present value of the annuity : If the tax rate is 33 percent, the operating cash flow, or OCF, What is the present value of the following annuity?
What is the amount if you pay for the washing machine today : The local home improvement store has a washing machine sale for $887, What is the amount if you pay for the washing machine today?

Reviews

Write a Review

Finance Basics Questions & Answers

  What should be the goal of the financial projections

What should be the goal of the financial projections in a business plan submitted to a venture capitalist?

  Linearity in a set of data

In regression forecasting, what do we mean when we say that there is linearity in a set of data? As a healthcare manager, why is it important for you to test for linearity of data, and how would you go about this task?

  You own a stock portfolio invested 35 percent in stock q

you own a stock portfolio invested 35 percent in stock q 20 percent in stock r 25 percent in stock s and 20 percent in

  Describe weighted average cost of capital

Describe the entire process of finding the Weighted Average Cost of  Capital - Difference between the types of inventory and inventory management systems used by firms and explain what determines the optimal inventory level.

  Where the equality holds given the sequence of information

Where the equality holds given the sequence of information sets {It. The underlying process Xt is known to follow the SDE: dXt = μdt + σdWt Determine the g(-) in the above representation for the case where M(-) is given by:

  Multiple choice questions on dividend policy1nbspnbsp

multiple choice questions on dividend policy.1.nbspnbsp matrix corporation follows the residual dividend policy. in a

  Ilk component cost of preferred stock

ILK has preferred stock selling for 95 percent of par that pays a 8 percent annual coupon.

  How much cash would be freed-up

Its cost of goods sold is 75% of sales, and it finances working capital with bank loans at an 8% rate. Assume 365 days in year for your calculations.

  What are different management strategies

What is a working capital and how does it relates to the company's ability to generate cash flows.

  At what value of annual cash flow would beverly enterprises

Beverly Enterprises owns a nursing home that is currently earning $2 million in cash flow on an annual basis, but this amount is expected to drop in the future.

  New structure and the benefits

What is the overall plan? What does Purchasing have to do with the categories? If they do it, then what is the outcome? Would it encounter support or resistance? Create a case to clarify the new structure and the benefits that will be created from ..

  Record the transactions of ds unlimited

Record the transactions of DS Unlimited, assuming the company uses a periodic inventory system.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd