What is value for the current share price

Assignment Help Finance Basics
Reference no: EM132503898

Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders.

a. Suppose a company currently pays an annual dividend of $2.80 on its common stock in a single annual installment, and management plans on raising this dividend by 6 percent per year indefinitely. If the required return on this stock is 12 percent, what is the current share price?

b. Now suppose the company in (a) actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $.70 per share, as it has for the previous three quarters. What is your value for the current share price now? (Hint: Find the equivalent annual end-of-year dividend for each year.)

Reference no: EM132503898

Questions Cloud

How you would disseminate the results of your project : Explain how you would disseminate the results of your project to an audience. Provide a rationale for why you selected this dissemination strategy.
What is the asked price of bond in dollars : In the above table, find the Treasury bond that matures in May 2036. What is the asked price of this bond in dollars?
Compute present value of the bids : A surface that costs $5.25 per square yard to install. This surface will have to be replaced at the end of 5 years. Compute present value of the bids
CHEN5040 Reaction Engineering Assignment : CHEN5040 Reaction Engineering Assignment Help and Solution, Curtin University - Assessment Writing Service - What is the order of reaction for a reaction
What is value for the current share price : What is your value for the current share price now? (Hint: Find the equivalent annual end-of-year dividend for each year.)
Discuss morbidity and comorbidity of the disease : Develop a questionnaire by utilizing your knowledge of health and illness, with the aim of acquiring all information you need from patients to prepare a plan.
Describe the health promotion teaching opportunities : Complete a Nutritional Assessment, using a tool of your choice, on two members of a selected family (one between the age 5-17 years and a second aged 21-59).
Identifying the continuing education opportunities : Write an essay "Need for lifelong learning for a professional career by identifying the continuing education opportunities in the profession"
What is the target stock price in five years : a. What is the target stock price in five years? b. What is the stock price today?

Reviews

Write a Review

Finance Basics Questions & Answers

  Estimate of future cash flow

With the WACC, we can discount our estimate of future cash flow, which should represent all cash flow (free cash flow, or distributable cash flow). As usual, we would need to apply a terminal valuation at some point.

  How much will you have in the account

You deposit $400 each month into an account earning 8% interest compounded monthly.

  Your bank is offering 55 fixed-rate mortgage requiring a

your bank is offering 5.5 fixed-rate mortgage requiring a down payment equal to 10 of the homes purchase price. the

  Calculate the cash conversion cycle

Calculate the Cash Conversion Cycle for the two years to the company that you choose and Rise your opinion in which year the CCC is better and why?

  Analyze the relationship between risk and rate of return

Analyze the relationship between risk and rate of return, and suggest how you would formulate a portfolio that will minimize risk and maximize rate of return.

  Explain how the plan could improve the situation for mbs

The U.S. Treasury attempted to resolve the credit crisis by establishing a plan to buy mortgage-backed securities held by financial institutions. - Explain how the plan could improve the situation for MBS.

  What factors must you consider in making your decision

You can put the money in a money market account at your bank and pay off your car loan, or you can invest the money in mutual funds. What factors must you consider in making your decision?

  When will their mortgage be paid off

What amount is remaining on their mortgage on December 31st, 2013?

  ?what is the best estimate of the current stock price

The dividends are then expected to grow at a 6% rate forever. The required return (rs) is 12%. ?What is the best estimate of the current stock price?

  Substitute for low yielding treasuries

Make sense for a Beta driven (diversified 60/40) pension fund or foundation as a diversifier? As a substitute for low yielding treasuries? Explain answer.

  What is the estimated hotel value today

Going out cap rate is 7.5%. Cost of sales is usually 3%. Your investment horizon is 5 years. What is the estimated hotel value today?

  What is your monthly payment

What is your monthly payment? What is the total amount of payments made over the life of the loan? How many years will it take to pay off the loan if you pay an extra $100 per month?

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