What is your estimate of stocks current price

Assignment Help Financial Management
Reference no: EM131449866

A company currently pays a dividend of $1.75 per share (D0 = $1.75). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 0.85, the risk-free rate is 4.5%, and the market risk premium is 6%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM131449866

Questions Cloud

What will be the monthly loan payment : Loan amortization and EAR You want to buy a car, and a local bank will lend you $15,000. What will be the monthly loan payment?
Are the rights underpriced or overpriced : What is the value of a right. Are the rights underpriced or overpriced. What is amount of immediate profit you can make on ex-rights day per share?
Weighted average cost of capital assuming no corporate taxes : A firm has an asset base with a market value of $5.6 million. what is the weighted average cost of capital assuming no corporate taxes?
Computer consulting business : Emelio and Charita are married taxpayers with 2 dependent children. Emelio starts a computer consulting business in 2012. Charita works as a real estate broker.
What is your estimate of stocks current price : A company currently pays a dividend of $1.75 per share (D0 = $1.75). What is your estimate of the stock's current price?
What was average growth rate in dividends over the period : what was the average growth rate in dividends over the period?
What is the required rate of return on stock with beta : What is the required rate of return on a stock with a beta of 0.8 if the risk-free rate is 2.2% and the expected return on the market is 9.9%?
What is the probability of occurrence of return : Firm X are normally distributed with a mean of 12% and a standard deviation of 10%. What is the probability of occurrence of a return less than 2 %?
What is the value of company that had free cash flow : What is the value of a company that had free cash flow of $150 million in the most recent year if the free cash flow is expected to grow by 4% per year.

Reviews

Write a Review

Financial Management Questions & Answers

  What is your debt payments to income ratio

What is your debt payments-to-income ratio if your debt payments total $684 and your net income is $2,000 per month.

  Appropriate expected rates of return for three securities

The expected return for the general market is 13.0% and the risk premium in the market is 8.9%. Tasaco, LMB, and Exxos have betas of 0.849, 0.681, and 0.581 respectively. What are the appropriate expected rates of return for the three securities?

  Goal is to create portfolio that has expected return

You have $300,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 10.45 percent. Stock X has an expected return of 9.84 percent and a beta of 1.24, and Stock Y has an expected..

  Moral hazard associated with the principal-agent problem

Starting in the 1980's, there has been a large increase in the issuance of bonds relative to issuance of stock by corporations. Explain why this might be a response of stockholders to the moral hazard associated with the principal-agent problem.

  Relationship could be influenced by the citizens of country

Who are the major policy makers for the Federal Reserve System and how do they rise to such an influential position? How do these policymakers influence national economic objectives? Refer to Figure 5.1 on page 100 of the textbook. What part of this ..

  What will the proceeds be for a loan

Find the proceeds from a loan of $2,300 for 2 years at a discount rate of 4.9%.- What will the proceeds be for a loan of $900 discounted by $75?

  What is the affective annual rate

A firm sells its $1,110,000 receivables to a factor for $1,076,700. The average collection period is 1 month. What is the effective annual rate on this arrangement? What is the affective annual rate?

  What will be the standard deviation and the rate of return

A bank will allow you to borrow -- at 8% -- up to the amount of your own money that you commit to the project (i.e., if you invest, say $10 of your own money, you can borrow another $10 to do the same). What will be the standard deviation and the rat..

  Real estate for capital budgeting purposes

If a firm has the option of selling some raw land to another firm or utilizing it to build a new factory, then if the firm chose to build the factory how should it handle the lost opportunity to sell the real estate for capital budgeting purposes? Wh..

  Withdraw money at the end of each year

At the end of this year you deposit $3000 into a saving account. Each year you plan to increase the amount by 2%. If you can earn 5% in your savings account, how much money will you have in 20 years? Suppose you have saved $1,000,000. You plan to wit..

  Calculate the total finance charge and annual allocation

Explain why Believer believes this lease should be categorised as a finance lease. You should refer to relevant international accounting standards to justify your answer.

  What is operating ratio and gross profit and margin ratio

Determine the operating ratio and gross profit margin ratio for leannes boutique. Last month, the boutique made $176,000 in sales on goods which cost $94,000. The boutique incurred $9800 in operating expenses, and made $34,300 in purchases, resulting..

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