What is your value for the current share price now

Assignment Help Financial Management

Reference no: EM131875211

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 $5.80 on its common stock in a single annual installment, and management plans on raising this dividend by 6.00 percent per year indefinitely. If the required return on this stock is 12 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Current share price ?

b. Now suppose the company in part (a) actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $1.45 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.) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Current share price ?

Reference no: EM131875211

Questions Cloud

Estimated value per share of your firm stock : If the last dividend paid was $3.40, what is the estimated value per share of your firm’s stock?

TVM formulas-What is the interest rate on John loan : John just bought a $30,000 car. He put $5,000 down and financed the rest. What is the interest rate on John's loan? What would Leticia's tuition cost in 2 years

Calculate that your dollar-weighted rate of return for year : Calculate that your dollar-weighted rate of return for the year was 30.6 percent. What was your time-weighted rate of return for the year?

Default risk premium on the corporate bond in percent : what is the default risk premium on the corporate bond in percent?

What is your value for the current share price now : Most corporations pay quarterly dividends on their common stock rather than annual dividends. What is your value for the current share price now?

Creighton had not made payment to the customer : Creighton settled a lawsuit and agreed to pay $78,000 to a customer for faulty goods. As of year-end, Creighton had not made payment to the customer.

What is the variable cost per hamburger : What are the fixed costs of hamburger production? What is the variable cost per hamburger?

What is wendel time-weighted rate of return : Wendel invests 5000 dollars in a mutual fund on January 1. What is Wendel's time-weighted rate of return?

How much can he spend each year after he retires : John turned 35 today, and he is planning to save $7000 per year for retirement, how much can he spend each year after he retires?

User Account

All Pages