What is the present value of, common stock

Assignment Help Financial Management

Reference no: EM131300852

What would an investor be willing to pay for, i.e. what is the present value of, common stock (is this significant to the question, why or why not?) in a firm that has no growth opportunities but pays dividends of $6.00 per year, starting today? The next dividend will be paid in exactly 1 year. The required rate of return is a stated annual rate of 12.5% compounded quarterly (do we need to convert this to an effective annual rate, EAR? Why or why not?). If the investor buys now, they will receive today’s dividend (so would the investore be willing to pay the straight PV or the PV + $6, why?).

Reference no: EM131300852

Questions Cloud

Stages of the training process : Discuss the 6 stages of the training process & Give examples of each, that you would implement in your workplace.

What is the purpose of the research : What is the purpose of the research? According to the article, what background research had been conducted in this area and how does it relate to and inform the research question and hypothesis? What are the hypotheses?

Consider implementing in buying a house : Imagine you are a public administrator who has just been promoted to a higher position but must relocate to another city and purchase a different home. Using the five distributing bargaining skills, present the steps and various aspects you would ..

What is the distribution of income after taxes and benefits : If the cost of administering the redistribution scheme takes 50 percent of the taxes collected, what is the distribution of income after taxes and benefits?

What is the present value of, common stock : What would an investor be willing to pay for, i.e. what is the present value of, common stock (is this significant to the question, why or why not?) in a firm that has no growth opportunities but pays dividends of $6.00 per year, starting today? The ..

Use the capital asset pricing model to find required return : For each of the cases shown in the following? table, use the capital asset pricing model to find the required return. The required rate for A is?

Conducting a proper investigation and mediation : What did you find interesting? Why do you think conducting a proper investigation and mediation is critical to organizations and employees? Can a sloppy investigation cost an organization money?

What is appropriate discount rate that should be applied : You have a project that on average is expected to generate positive cash flows starting next year (at t = 1) of $150,000, growing at 10 percent per year for the foreseeable future. What is the appropriate discount rate that should be applied to the ..

Calculate the distribution of income after taxes : Why do economists think that discrimination in the labor market is an unlikely explanation for the persistent inequality in earnings between women and men and among the races?

User Account

All Pages