Calculate the current price of the common stock, Finance Basics

Assignment Help:

Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

Stock Price Today (P0) = ____________________.

4b. A company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's stock price today (P2012)? All things held constant, what will be the price of this company's stock in eight years (P2020)?

Stock Price Today (P2012) = ____________________.

Stock Price in 8 Years (P2020) = ____________________.

 


Related Discussions:- Calculate the current price of the common stock

Business ethics - objectives of business entity, Business Ethics - Objectiv...

Business Ethics - Objectives of Business Entity Connected to the question of social responsibility is the matter of business ethics.  Ethics are explained as the "standards of

In 1899, If the winner’s prize increases at the same rate (8.43%), what wil...

If the winner’s prize increases at the same rate (8.43%), what will it be in 2041?

Calculate the overhead absorption rates, A manufacturing organisation has t...

A manufacturing organisation has three production cost centres, the cutting department, the processing department and the finishing department, and two service cost centres, the st

List three career opportunities in the field of finance, List and describe ...

List and describe the three career opportunities in the field of finance. Finance has three major career paths that are financial management, financial markets and institutions

Shareholders and management, Shareholders and Management There is near...

Shareholders and Management There is near separation of ownership and management of the firm. Landlord employs professionals as managers who such have technical skills. Manage

Credit score model, The topic taken for this study is "FINANCIAL VIABILITY ...

The topic taken for this study is "FINANCIAL VIABILITY OF X BY APPLYING CREDIT SCORE MODEL".  The study has attempted to analyze the financial viability of the company by applyi

Five common mistakes in capital budgeting, Please list five common mistakes...

Please list five common mistakes in capital budgeting that could either overstate or understate the value of a project.Bonus: explain the relationship between the errors above and

#bond computations, bond issued $900,000 of 8% on 3/1, they pay interest on...

bond issued $900,000 of 8% on 3/1, they pay interest on 9/1 and mature in 10years case a @ 100, case b @ 92, case c @ 105 wha is total cash outflow thru maturity total borrowing co

Agency relationship between auditors and shareholders, Agency Relationship ...

Agency Relationship between Auditors and Shareholders Shareholders appoint auditors as per the provisions of Section 159(1)-(6) of the Companies Act. The auditors are believed

Financial cycle, what is the applicability of a financial cycle to poultry...

what is the applicability of a financial cycle to poultry?

Write Your Message!

Captcha
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