What is your estimate of the stock current price

Assignment Help Financial Management
Reference no: EM131993104

A company currently pays a dividend of $1.25 per share (D0 = $1.25). It is estimated that the company's dividend will grow at a rate of 24% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1, the risk-free rate is 6.5%, and the market risk premium is 5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Please be very detailed with your explanation

Reference no: EM131993104

Questions Cloud

Determine seduak optimal capital structure : Based on these estimates, determine Seduak’s optimal capital structure
Selection that was occurring in the population : Consider this sentence "The selection that was occurring in the population on the individuals was of a nature that favored the individuals in the population
Prepare a presentation for the mayor of your city : Hurricane Katrina demonstrated that the United States was unprepared to deal with a disaster of such magnitude.
Coal mines safety management system : What are the basic elements that a coal mines safety management system must provide - Provide a summary of what the site senior executive (SSE) for a coal mine
What is your estimate of the stock current price : What is your estimate of the stock's current price?
Discuss the impact the theory of consumer : The impact the theory of consumer choice has on: • Demand curves • Higher wages • Higher interest rates.
Compare how effective the data was in analyzing each : Identify at least one fact from the government website to use in an investigative report for each of the two examples.
Write a paper about the strategic planning guarantees : Strategic planning guarantees that an organization stays important and receptive to the requirements of its locale and adds to organizational dependability.
Describe the change in southwest airlines boarding process : Describe the change in Southwest Airlines boarding process. What was Southwest's main goal introducing the early-bird check-in?

Reviews

Write a Review

Financial Management Questions & Answers

  Consider retailing firm with a net profit margin

Consider a retailing firm with a net profit margin of 3.6%?, a total asset turnover of 1.88?, total assets of $43.4 million, and a book value of equity of $18.8 million. What is the? firm's current? ROE? If the firm increased its net profit margin to..

  Transforms of largest magnitude from image representation

Write a Matlab program that enables you to specify and keep only a proportion of the Fourier Transforms of largest magnitude from an image representation.

  Determine the after-tax marginal costs

Determine the after-tax marginal costs if the tax rate is 40% and 10%. If the minimum EUAC of a challenger is $56,000 when should the machine be replaced?

  Machines have the same production speed and capacity

Machine A costs $15,000 and will last 5 years, at which time the value of the machine is $5,000 (it is worth $7,000 in 4 years). Machine B costs $12,000 and will last 3 years, after which the machine is worth $4,000. If both machines have the same pr..

  Compute the rate of return of project

Compute the rate of return of the project. Enter your answer as a percentage between 0 and 100.

  How much taxable income does mrs hess hobby generate

a. How much taxable income does Mrs. Hess's hobby generate if her AGI before consideration of the hobby revenues and expenses is $33,000 and she doesn't itemize deductions? b. How would your answer change if Mrs. Hess pays enough state and local tax ..

  Calculate the required rate of return for an asset

Calculate the required rate of return for an asset that has a beta of 0.31?, given a? risk-free rate of 4.3?% and a market return of 8.4?%.

  Two mutually exclusive oil-drilling projects

Anadarko Petroleum must choose between two mutually exclusive oil-drilling projects, which each have a cost of $12 million.

  Retirement plan-how much will he have to invest each montth

How much will he have to invest each month to be able to reach his goal at the end of 34 years?

  Based solely on the results of calculating financial ratios

Why or why not do you consider it sound business practice to make financial decisions based solely on the results of calculating financial ratios, for instance,

  Build a regression model with time series errors

Several authors used the data to study index futures arbitrage. - Build a regression model with time series errors between {yt} and {xt}, with yt being the dependent variable.

  Most companies use target percentages for debt-common equity

Most companies use "target" percentages for debt, common equity and preferred equity in their capital structure.

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