Calculate the current stock price, Cost Accounting

Assignment Help:

The Bloomington Electric Company operates in a stable industry and therefore has predictable dividend growth of 8% per year. The most recent annual dividend was paid yesterday in the amount of $4. Assume the appropriate discount rate is 15%.

What is the current stock price?

Assuming the annual growth rates for the next three years is 20% each year; but starting the fourth year and after the growth rate remains constant at 8%. What is the current stock price under this scenario?
Assuming a dividend growth rate of 8%, what is the dividend yield of this stock if the current stock price is $40?

Answer

a) Current Stock Price=Dividend Received/Dividend Growth Rate =4/.08 =50

Year	Dividend	D.F	PV
1	4.8	0.869565	4.173913
2	5.76	0.756144	4.355388
3	6.912	0.657516	4.544752
4	86.4	0.571753	49.39948
			62.47353

b) ividend for infinite stream at 8% from 4^th year =Dividend of that year /Rate of dividend

=6.91/.08

=86.4

c) Dividend Yield =Dividend Received/Stock Price

=4/40

=10%

Related Discussions:- Calculate the current stock price

Determine cost, . Alice Company has received a special order from Jo...

. Alice Company has received a special order from John. John wishes to buy 100 units of Alice's product at a price of $48. The regular price is $65. The unit cost informati

Help, ) Ialani Corp. uses a job order costing system for the yachts it cons...

) Ialani Corp. uses a job order costing system for the yachts it constructs. On September 1, 2010, the company had the following account balance: Raw material inventory 332400 Wo

Purchase cost and ordering cost, Ordering cost is incurred whenever the ...

Ordering cost is incurred whenever the inventory is replenished. It includes costs associated with the processing and chasing of the purchase order transportation, inspec

Single limiting factor, Single Limiting Factor Where a single limiting...

Single Limiting Factor Where a single limiting factor exists for the decision making sequence may be implemented given as:- - Compute the contribution per unit of limiting

Prepare the balance sheet, High Bhd acquired shares in two other companies ...

High Bhd acquired shares in two other companies as follows: Additional information: i) Goodwill on acquisition of Swift was impaired by RM80,000 as

Compute overhead rate per hour, Reamer Company uses a predetermined overhea...

Reamer Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next ye

Compute prevention costs-appraisal costs-internal failure , Question: A...

Question: At the beginning of the year, Asquith Company Ltd initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help asse

Describe the concept of full cost recovery with illustrative, Describe the ...

Describe the concept of full cost recovery with illustrative examples.

Explanation of total cost line, Total costs include both variable costs and...

Total costs include both variable costs and fixed costs. Variable costs are costs which can beeasily identified or related to a cost per unit or activity level of some kind for exa

Calculate the allocations and totals, A company wishes to devise a fair mea...

A company wishes to devise a fair means of allocating funds to its four main departments, namely Accounts, Production, Sales and Transport. The total allocation is to be £100,000.

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages