What is your estimate of the stock current price

Assignment Help Financial Management
Reference no: EM132018864

A company currently pays a dividend of $3.5 per share (D0 = $3.5). 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 1.35, the risk-free rate is 3.5%, 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: EM132018864

Questions Cloud

What is the firm earnings per share : What is the firm's Earnings Per Share (EPS)? What is the current P/E ratio?
What must be one-year forward exchange rate : what must be the one-year forward exchange rate?
Lease versus borrow to purchase : Should Runt Ltd. lease or borrow to purchase the photocopying equipment?
About the bond refunding : Currently T-bills yield 2.4 percent and a 30 day overlap period is expected. Swan Song has a tax rate of 28%.
What is your estimate of the stock current price : The company's stock has a beta of 1.35, the risk-free rate is 3.5%, What is your estimate of the stock's current price?
What is portfolio return : The monthly returns for General Dynamics, Starbucks, and Nike were 7.30 percent, -1.62 percent, and-0.67 percent. What is your portfolio return?
What must be the expected return to stock : The risk-free rate of interest is 11 %. What must be the expected return to stock B?
Operates three stores in large metropolitan area : Superior Markets, Inc., operates three stores in a large metropolitan area. what is the financial advantage (disadvantage) of closing the North Store?
Effective annual interest rate was equal to the same value : The effective annual interest rate was equal to the same value each year. What is that value?

Reviews

Write a Review

Financial Management Questions & Answers

  A universal life insurance policy is considered

A universal life insurance policy (ULI) is considered to be

  Determine the maximum on-hand inventory

Determine the maximum on-hand inventory. Determine the optimal number of production runs, on average, each hour.

  Estimated real dollar revenues and costs

A telephone company is considering building a new automated switching distribution substation with a useful life of 20 years to support new suburban developments. The substation is located in a state in which the combined tax rate is 40%, and the tel..

  How much should you be willing to pay

Bond Valuation: -How much should you be willing to pay for the bond if the investor's required rate of return is 10 percent?

  Determine the capital recovery based upon an interest rate

If O&M costs equal $2,000 per year and the machine can produce 3,000 units per year, what is the unit cost?

  Expected return-standard deviation of return of portfolio

what are the expected return and standard deviation of the return of the portfolio? is the portfolio more risky than Safe Inc. Explain?

  Calculate the incremental operational cash flows

Calculate the incremental operational cash flows. Reference MACRS Depreciation Percentages for three-year class life assets:

  Discuss the limitations of the bundled policy

Calculate the average retention and unnecessary coverage under each plan. Discuss the limitations of the above bundled policy.

  What was its charge for depreciation and amortization

What was its charge for depreciation and amortization?

  What is the book value of the equipment at end of project

What is the book value of the equipment at the end of the project's useful life (Year 3)? Indicate your answer in the box.

  Compute your total dollar return on investment

Compute your total dollar return on this investment.

  About the franchise value

Suppose that Mark Cuban plans to purchase the Mavericks in 2000 for $285 million and he expects to receive $400,000 in profits in years 1, 2, and 3 (each year).

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