What is your estimate of the stock current price

Assignment Help Financial Management
Reference no: EM131947144

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 15% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.05, the risk-free rate is 6%, and the market risk premium is 3%. What is your estimate of the stock's current price? Round your answer to the nearest cent.

Reference no: EM131947144

Questions Cloud

What is the value of the follow-on project as a real option : What is the value of the follow-on project as a real option? Suppose that the value of the follow-on investment fluctuates with a standard deviation of 50%.
What is current state of affairs of global financial markets : What do fixed and floating exchange rates have in common. What is the current state of affairs of global financial markets?
Find the after-tax cost of capital for debt financing : Black Hill Inc. sells $100 million worth of 13-year to maturity 11.40% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $979.
What is the market price of one of the given bonds : Black and White, Inc. offers a 9 percent bond with a yield to maturity of 8.15 percent. The bond pays interest annually and matures in 7 years.
What is your estimate of the stock current price : The company's stock has a beta of 1.05, the risk-free rate is 6%, and the market risk premium is 3%. What is your estimate of the stock's current price?
Find the effective yield earned by blackrock capital : Blackrock Capital is an investment firm that focuses on opportunities in South America. Blackrock had purchased Brazilian reals (BRL) a year ago when a BRL.
Expense allocation concept : Which of the following is not an expense allocation concept. Which of the following elements is needed to calculate the present value index?
Make sense to replace incandescent bulbs : If you require a 11 percent return, at what cost per kilowatt-hour does it make sense to replace your incandescent bulbs today?
Finding the before-tax cost of capital : Black Hill Inc. sells $100 million worth of 28-year to maturity 10.29% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $991 for each.

Reviews

Write a Review

Financial Management Questions & Answers

  Assume the net working capital will be recovered

Kinky Copies may buy a high-volume copier. The machine costs $170,000 and will be depreciated straight-line over 5 years to a salvage value of $30,000. Kinky anticipates that the machine actually can be sold in 5 years for $37,000.

  Calculate the project internal rate of return

J. Cena is looking to grow upon an existing project. The expansion requires an immediate outflow of $85 million. J.Cena anticipates the project will generate one future cash flow of $155 million that will arrive at the end of year 6, and only in that..

  Which price you will get a margin call

You are bearish on stock ABC, and its current market price is €100 per share. You ask your broker to sell short 100 shares. Your broker has a 50% margin requirement on short sales, so you add €5,000 on your account with the broker. Holding period is ..

  What is the company pretax cost of debt

Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 100 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. Wh..

  Describe the characteristics of ladder investment strategy

Describe the characteristics of the ladder investment strategy and compare them to the barbell investment strategy. Why should the barbell strategy outperform the ladder strategy in a stable or declining interest rate environment? Why should the ladd..

  Valuing preferred stock

{valuing preferred stock } a firm has an issue of preferred stock outstanding that pays a $3.5 dividend every year in perpetuity if this issue currently sells for $85 per share what is the required return

  How does hollys death affect their contract

Franz, the owner and manager of Green’s Grocery Store, contracts to buy sixty crates of fresh peaches from Holly, the owner and manager of Ideal Farms. Suppose that Holly dies before she can harvest and deliver the peaches. How does Holly’s death aff..

  What are net operating cash flows in years one two and three

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,100,000, and it would cost another $21,500 to install it. What is the Year 0 net cash flow? What are the net operating cash flow..

  What is the implied interest rate on a treasury bond

What is the implied interest rate on a Treasury bond ($100,000, 6% coupon, semiannual payment with 20 years to maturity) futures contract that settled at 100'24?

  Dodd-frank act or the sarbanes-oxley act

Explain any accounting regulations, such as the Dodd-Frank Act or the Sarbanes-Oxley Act, that affect Bed Bath & Beyond.

  What is the projected eps after completion of the project

What is the projected EPS after completion of the project?

  What is your expected one-year holding-period return

What is the intrinsic value of a share of Xyrong stock? What is your expected one-year holding-period return on Xyrong stock?

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