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Gordon Growth model for stocks and TVM You own stock in Medical Money-Flows Inc. (MMF). The company has had a very strong history of dividends, and just paid its annual dividend last Thursday, of $3.25 per share this year. Analyst reports online suggest next year’s dividend will be $3.38 per share. In fact, its price closed at a new high Friday at $84.50 per share. After Friday’s market-close, however, it was announced that the board had met with its President and, due to the recent implementation of Obamacare, it will only be able to pay $3.00 per share next year and anticipates similar (equal) drops for three more years, but expects to be able to stabilize the dividend payout thereafter. Working some quick finance/math, you want to estimate where the price of the stock might open in trading Monday morning. Given the increased risk of the firm, while T-bills are paying 3% you have raised your beta estimate for the firm to 1.2, and believe there’s a 7.5% equity risk premium. (a) To the nearest dollar, at what price per share would you expect the stock to open in trading Monday morning? (b) Given the closing price Friday, and the dividend you WERE expecting for next year, what Was your required rate of return on MMF before the news came out?
The relationship between a bond's price and the yield to maturity is an inverse relationship.
Find the cash flow from the sale of the asset.
Combined Communications is a new firm in a rapidly growing industry. What is the current value of one share of this stock if required rate of return is 15.5%
Keith and Dena Diem have personal property coverage with a $250 limit on rency, a $1,000 limit on jewelry, and a $2,500 limit on gold, silver, and pewter The do not have a personal property floater. If $500 in cash, $2,400 of jewelry, and $1,5 of pew..
Gemini, Inc., an all-equity firm, is considering an investment of $1.8 million that will be depreciated according to the straight-line method over its four-year life. The project is expected to generate earnings before taxes and depreciation of $605,..
Bank of America, JP Morgan Chase, Morgan Stanley, and Citi Bank are the leading banks in the issuing process of GM’s new stocks. Therefore, GM chooses which of the following distribution method for its new stocks?
Maynard Steel plans to pay a dividend of $ 3.16 this year. The company has an expected earnings growth rate of 4.4 % per year and an equity cost of capital of 10.7%. at what rate are Maynard's dividends and earnings per share expected to grow?
You have just made your first $4,000 contribution to your individual retirement account. What will your account be worth when you retire in 45 years?
Calculate the value of a six-month futures contract on a Treasury bond.
Shelly just borrowed $2,800 which she will repay in 12 monthly payments of $241.50. what is the amount of interest included in her first payment?
What is the difference between the marginal default probability and the cumulative default probability?
Two parcels of land are being considered for a new office building. Both sites cost the same amount but differ mainly in their annual property tax assessments. How much money would have to be set aside today for each site to provide for property taxe..
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