What must the current stock price be according to the ddm

Assignment Help Financial Management

Reference no: EM131521806

The FI Corporation's dividends per share are expected to grow indefinitely by 8% per year.

a. If this year's year-end dividend is $11.00 and the market capitalization rate is 15% per year, what must the current stock price be according to the DDM? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Current stock price $157.14 (correct)

b. If the expected earnings per share are $10.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

Value of ROE ______% ??

c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Amount $ _____ per share ??

Reference no: EM131521806

Questions Cloud

Experiencing a period of rapid growth : Snyder Computer Chips, Inc. is experiencing a period of rapid growth. Calculate the value of the stock today.

Free cash flow approach to value the firms equity : Use the free cash flow approach to value the firm’s equity.

What is your estimate of GGs intrinsic value per share : The Generic Genetic Corporation pays no cash dividends currently and is not expected to for next 4 years. What is your estimate of GGs intrinsic value per share

Annual sales figure when evaluating this project : What is the amount to use as the annual sales figure when evaluating this project?

What must the current stock price be according to the ddm : If this year's year-end dividend is $11.00 and the market capitalization rate is 15% per year, what must the current stock price be according to the DDM?

Amount of the aftertax salvage value of asset : What is the amount of the aftertax salvage value of this asset?

Analyzing the after-tax cost of debt for firm : You are analyzing the after-tax cost of debt for a firm. What is the current YTM of the bonds?

Assume there is no inflation and no tax on interest income : Also assume there is no inflation and no tax on interest income used to pay college tuition and expenses.

Compute the present value of a five-year : Assuming that the current interest rate is 3 percent, compute the present value of a five-year, 5 percent coupon bond with a face value of $500.

User Account

All Pages