Assuming the required rate of return on stock

Assignment Help Financial Management
Reference no: EM131348132

Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0 = 4.00). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1 = .20) and at a rate of 10 percent the following year (that is, g2 = .10). Thereafter (i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Robotic Atlanta stock is 20 percent, compute the current price of the stock. (Round your answer to 2 decimal places and record your answer without dollar sign or commas)

Reference no: EM131348132

Questions Cloud

Problem regarding the company and consumers : 1. How does this FDA regulation protect consumers? 2. Why did the company voluntarily change its product name? 3. What effect did this regulation have on the company and on consumers?
Describe the characteristics of the learning style : Which learning style did you identify with? Describe the characteristics of this learning style. Did you know this was your preferred learning style before completing the assessment?
Firm is evaluating project with an initial cost : A firm is evaluating a project with an initial cost of $ 827,994 and annual cash inflows of $ 248,784 per year (first cash flow to be received exactly one year from today) for each of the next 5 years. If the cost of capital for this project is 13 %,..
What is company target debt-equity ratio : Fama’s Llamas has a weighted average cost of capital of 10 percent. The company’s cost of equity is 14 percent, and its pretax cost of debt is 8 percent. The tax rate is 38 percent. What is the company’s target debt−equity ratio?
Assuming the required rate of return on stock : Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0 = 4.00). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1 = .20) and at a rate of 10 percent the following year (that is, g2..
Calculate the current flowing after one time constant : An inductor of negligible resistance and of inductance 0.25 H, is connected in series with a 1.5 kΩ resistor, across a 24 V d.c. supply. Calculate the current flowing after one time constant.
Determine the asc coefficient of performance of the system : Determine the ASC coefficient of performance of this system.- The Carnot coefficient of performance for a refrigerator operating between the same temperature limits.
Case discussion-neurologic disorders : PBL Case Discussion: Neurologic Disorders Part One (graded) Setting: large urban city Family practice clinic that employs physicians and nurse practitioners
Are the transitions between paragraphs and sections clear : -Is there a proper APA abstract (length, content, style) - Does it concisely convey the content of the Book Critique?

Reviews

Write a Review

Financial Management Questions & Answers

  Part of the process of cost allocation

Which of the following is not part of the Process of cost allocation?

  Value bond outstanding with coupon rate

Yan Yan Corp. has a $10,000 par value bond outstanding with a coupon rate of 5.2 percent paid semi annually and 28 years to maturity. The yield to maturity on this bond is 4.3 percent. What is the price of the bond?

  Issued preferred stock with par value

Karen corporation issued preferred stock with par value $800.the stock promised to pay an annual dividend equal to 20% of the par value. if the appropriate discount rate for this stock is 11%,what is the value of the stock

  The effective before tax cost of capital

To help fund an addition to your house, you borrow $25,000 from your bank. The conditions of your loan state that the interest rate is 9 percent compounded monthly. The Effective before tax cost of capital?

  What does the value of the yuan have to do with us goods

What does the value of the yuan have to do with U.S. goods being "artificially inflated in price" or Chinese goods being "artificially deflated in price"?

  The interest is reinvested at an annual effective rate

Victor invests 300 into a bank account at the beginning of each year for 20 years. The account pays out interest at the end of every year at an annual effective interest rate of i% . The interest is reinvested at an annual effective rate of (i/2)%. T..

  What is the year-end 2008 balance in retained earnings

Statement of Retained Earnings Triplette, Corp. began the year 2008 with –$5 million in retained earnings. The firm earned net income of $10 million in 2008 and paid $2 million to its preferred stockholders and $1 million to its common stockholders. ..

  Value of stock according to the dividend discount model

Stock A has an expected dividend of $1.30 payable as of two years from now (i.e. it is not expected to pay any dividends over the first two years). After that, dividends are expected to grow at an annual rate of 1% forever. If the discount rate is 5%..

  Investment portfolio

Let’s assume you want to retire with $1,000,000 in your investment portfolio. Given that your investment timeline is 35 years, the return on investment is going to average 8% and you plan to contribute a fixed amount every year for 35 years. What wil..

  Assume an after tax saving interest rate

Assume an after-tax saving interest rate of 6 percent and a tax rate of 28 percent.

  Compute the realized rate of return for investor

Six years ago the Singleton Company issued 20-year bonds with a 14% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Singleton called the bonds. Compute the realized rate of return ..

  Analyze the performance of timco

Analyze the performance of Timco. This year: ATO=1.4, GPM=.26, EM=1.8, Interest Retention=.81, Tax Retention=.66. Last year: ATO=1.2, GPM=.29, EM=1.6, Interest Retention=.84, Tax Retention=.69.

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