What is the value of the stock today

Assignment Help Financial Management
Reference no: EM132005802

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly-at a rate of 15% per year-during Years 4 and 5; but after Year 5, growth should be a constant 10% per year. If the required return on Computech is 14%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.

Reference no: EM132005802

Questions Cloud

What is the cost of equity after recapitalization : The company borrows $152,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization?
According to the pecking order theory of stewart myers : According to the Pecking Order Theory of Stewart Myers, what is the pecking order that managers should follow in raising capital for investment?
Costs may produce an optimal capital structure : Describe how the trade-offs between the different classes of Agency Conflicts and Costs may produce an Optimal Capital Structure
What is an estimate of brandtly price per share : What is the firm's horizon, or continuing, value? What is an estimate of Brandtly's price per share?
What is the value of the stock today : If the required return on Computech is 14%, what is the value of the stock today?
What is the expected value of this stock five years : What is the expected value of this stock five years from now if the discount rate is 14 percent?
Compute the annual rate on the real bond : Compute the annual rate on the real bond.
Which bank has more liquidity risk : Core deposits are 65 percent of assets and borrowed funds are 5 percent of assets. Which bank has more liquidity risk?
Find the hpr on? portfolio during the year : Find the HPR on? Simon's portfolio during the year ended December? 31, 2017.

Reviews

Write a Review

Financial Management Questions & Answers

  Identify the company you work for and the product

An ever-growing world population means American firms have countless opportunities to conduct business abroad, especially in developing nations.

  An unlevered firm has expected earnings

An unlevered firm has expected earnings of $2,401 and a market value of equity of $19,600. The firm is planning to issue $4,000 of debt at 6 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What ..

  What is the present value of the bond

A 20-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.25% (2.625% of face value every six months). The semiannually compounded interest rate is 5.0% (a six-month discount rate of 5.0/2 = 2.5%). What is the present value of the ..

  Zero coupon treasury bonds for years

On March 11, 20XX, the existing or current (spot) 1-, 2-, 3-, and 4-year zero coupon Treasury security rates were as follows: 1R1 = 0.55%, 1R2 = 1.15%, 1R3 = 1.55%, 1R4 = 1.70% Using the unbiased expectations theory, calculate the 1-year forward rate..

  What must the expected return on the market be

A stock has an expected return of 10.5 percent, its beta is 1.15, and the risk-free rate is 5 percent. What must the expected return on the market be? (Do not round intermediate calculations and round your final answer to 2 decimal places.

  The firms best after-tax cost of debt on the bond

Belton is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 15 years. Investors are willing to pay $ 958 for the bond.. The company is in an 18 percent tax bracket. What will be the firm's best after-tax cost of debt ..

  Accounting profit for each of the two years of operations

Calculate his accounting profit for each of the two years of operations. What are the consequences of the assumptions which proved to be incorrect?

  What is project internal rate of return

What is the project’s internal rate of return?

  Why is healthcare planning just as important as financial pl

Why is healthcare planning just as important as financial planning? Are the two interelated?

  Compute the depreciation schedule using-macrs depreciation

Compute the depreciation schedule using: (a) MACRS depreciation (b) Straight-line depreciation (c) Sum-of-years' digits (SOYD) depreciation (J) Double declining

  Equity carve-outs and initial public offerings

Differentiate between equity carve-outs and initial public offerings. What do research studies show about the shareholder wealth effects of each?

  What is expected return of portfolio

What is the portfolio weight of each stock? What is the expected return of your portfolio?

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