Which is the constant growth rate for the firm

Assignment Help Financial Management

Reference no: EM131065120

Maxwell Communications paid a dividend of $2.00 last year. Over the next 12 months, the dividend is expected to grow at 10 percent, which is the constant growth rate for the firm (g). The new dividend after 12 months will represent D1. The required rate of return (Ke) is 18 percent. Compute the price of the stock (P0). (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131065120

Questions Cloud

Government bond issued-calculate the price of the bond : A government bond issued in Germany has a coupon rate of 5%, a face value of 100 euros, and matures in five years. The bond pays annual interest payments. Calculate the price of the bond (in euros) if the yield to maturity is 3.5%. A. 100.00 B. 106.7..

Consider a graph of the security market line : Consider a graph of the security market line. Assume the vertical intercept is 3%, beta is 1.2 and the expected return on the market is 10%. What is the risk free rate of return? Express your number as a percentage.

What is the dollar cost of the loan : Talmud Book Company borrows $18,600 for 60 days at 18 percent interest. What is the dollar cost of the loan?

What is the effective interest rate on the LIBOR loan : Dr. Ruth is going to borrow $9,800 to help write a book. The loan is for one year and the money can either be borrowed at the prime rate or the LIBOR rate. Assume the prime rate is 9 percent and LIBOR 2.5 percent less. What is the effective interest ..

Which is the constant growth rate for the firm : Maxwell Communications paid a dividend of $2.00 last year. Over the next 12 months, the dividend is expected to grow at 10 percent, which is the constant growth rate for the firm (g). The new dividend after 12 months will represent D1. The required r..

Calculate the maximum deflection d : Assuming that the modulus of elasticity E is equal to 10 ×106 psi and that the ends of the bar are pinned, calculate the maximum deflection d and the maximum bending moment Mmax.

What is the standard deviation of the rate of return : A project has a 0.44 chance of doubling your investment in a year and a 0.56 chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?

Bond valuation? relationships : (Bond valuation? relationships) A bond of Telink Corporation pays ?$100 in annual? interest, with a ?$1,000 par value. The bonds mature in 15 years. The? market's required yield to maturity on a? comparable-risk bond is 8 percent. What is the value o..

Values of mean return and variance for the stock fund : Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 −36% −11% Mild recession 0.20 −12% 13% Normal growth 0.40 15% 4% Boom 0.35 32% 5% b. Calculate the values of mean return and v..

User Account

All Pages