What is the value of the stock today

Assignment Help Finance Basics

Reference no: EM132019443

Question: Nonconstant growth

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 $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 49% per year - during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. If the required return on Computech is 17%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.

Reference no: EM132019443

Questions Cloud

Design a behavior modification approach : Describe three antecedent-based modifications that can be made to the classroom environment that will prevent or reduce the occurrence of inappropriate behavior

What is joe recognized gain : Joe England sold equipment on May 10, 2014 for $100,000. What is Joe's recognized gain in 2014 and 2015

What is your estimate of the stock current price : A company currently pays a dividend of $3 per share (D0 = $3). It is estimated that the company's dividend will grow at a rate of 21% per year for the next.

Forces would occur to eliminate arbitrage opportunity : what market forces would occur to eliminate the arbitrage opportunity?

What is the value of the stock today : Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

Compute the total amount of additional code : Compute the total amount of additional code Sec. 263 A costs to capitalize for FIFO inventory under the simplified production method

What is the corresponding ear : Find the APR for this loan. What is the corresponding EAR?

What will ttc dividend and capital gains yields be : What will TTC's dividend and capital gains yields be once its period of supernormal growth ends? (Hint: These values will be the same regardless.

Will the exporter be benefited or suffered from this change : If the Swiss franc appreciates in FX price between now and the due date of the receivable, will the exporter be benefited or suffered from this change?

User Account

All Pages