What is the present value of the common stock

Assignment Help Financial Management

Reference no: EM13953737

A company's recent dividend is $1 per share. The company expects that the dividends will grow at 10% for the next three years. After that the dividends will increase at 5% forever. Its stock beta is 1.0. Currently, the expected market return is 12%, and the risk-free rate is 7%. What is the present value of the common stock?

Reference no: EM13953737

Questions Cloud

Market research purchased as well as the income statement : In a 500 word essay how you analyzed your results from the previous decision period using the Market Research purchased as well as the Income Statement, Dashboard, and other tools available to you. Explain how you can apply the information and use of..

Balance sheet-statement of cash flows for the year ended : The balance sheet for December 31, 2011, income statement for the year ended December 31, 2011, and the statement of cash flows for the year ended December 31, 2011, of Bernett Company are shown in the following balance sheet.

How much would it have had to deposit : The Ajax Co. just decided to save $1,500 a month for the next five years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 3.25% interest compounded monthly. It deposits the first $1,500 to..

What is the cost of the trade credit : Suppose your firm buys $1,000 worth of supplies on credit with terms 3/15 n60. If you pay the bill on the 14th day after the purchase, what is the cost of the trade credit you have used for the 14-day period? If you pay the bill on the 50th day after..

What is the present value of the common stock : A company's recent dividend is $1 per share. The company expects that the dividends will grow at 10% for the next three years. After that the dividends will increase at 5% forever. Its stock beta is 1.0. Currently, the expected market return is 12%, ..

What is the advantage of using forward contracts : Suppose that you are a financial manager of a company that exports mainly to England. You expect to receive a huge payment in British pounds from your customer in a couple of months. To avoid the potential adverse move of British pound, you have deci..

An increase in the discount rate of a stock : Other things held constant, an increase in the discount rate of a stock will result in an increase in its price. Other things held constant, a decrease in the cost of capital will result in an increase in a project's payback period.

What is the cost of preferred stock-cost of common stock : Given the following information for XYZ Co., you want to find the cost of capital (WACC). The firm’s tax rate is 40%. Ignore all the flotation cost. Debt: 8,000 7% coupon bonds outstanding, $1,000 par value, 15 years to maturity, selling for 98% of p..

What is annualized cost of forgoing discount : If a firm buys on trade credit terms of 3/10, net 50 and decides to forgo the trade credit discount and pay on the net day, what is annualized cost of forgoing the discount (assume a 360-day year)?

User Account

All Pages