Common stock dividends have been growing at annual rate

Assignment Help Financial Management
Reference no: EM13829480

General Cereal common stock dividends have been growing at an annual rate of 7 percent per year over the past 10 years. Current dividends are$1.70 per share. What is the current value of a share of this stock to an investor who requires a 12 percent rate of return if the following conditions exist?

a. Dividends are expected to continue growing at the historic rate for the foreseeable future.

b. The dividend growth rate is expected to increase to 9 percent per year.

c. The dividend growth rate is expected to decrease to 6.5 percent per year.

Reference no: EM13829480

Questions Cloud

Write a review summary of david humes standard of time : The problem in Sociology and it discusses about writing a review for David Hume's "Standard of Time". David Hume's Standard of Time discusses about how people differ in their approach towards expression of words.
Problem regarding radio frequency identification : VISA CARD RFID (Radio frequency identification) Cover the following.
Explain the concept of market development : Market development is an expansion strategy that can be used by a firm to take advantage of opportunities in the market. explain the concept of market development, using examples.
Designing the circuit which can scale the voltage : Design a circuit that can scale the voltage from a sensor with range of 0mV - 100mV to the range of 0V - 5V. Now feed this conditioned signal into a 12-bit ADC with VRL = 0 and VRH = 5V and determine the voltage (from the sensor) that will generat..
Common stock dividends have been growing at annual rate : General Cereal common stock dividends have been growing at an annual rate of 7 percent per year over the past 10 years. Current dividends are$1.70 per share. What is the current value of a share of this stock to an investor who requires a 12 percent ..
Describe the four basic types of inventory : Describe the four basic types of inventory and why is it important to conduct cycle counting - Explain why lean production and Six Sigma are so important to successful supply chain management.
Instruction sequence to output the value : Write an instruction sequence to output the value $35 to Port P.
Clarify the factors affecting a persons personal identity : The problem is from Sociology and it is clarify the factors affecting or shaping a person's personal identity over a life time. This has been discussed in the answer.
Interest will they pay over the entire length of mortgage : Mathematics of Finance - A family has just purchased a new home for $165,000. After they put down a 20% down payment, they borrow the rest at 5.35% for 15 years. How much is the monthly mortgage payment? How much interest will they pay over the entir..

Reviews

Write a Review

Financial Management Questions & Answers

  Assuming annual payments and assuming monthly payments

Suppose we are assuming a $5 million 20-year mortgage with 8 years remaining at a rate of 4%. If we could obtain a new 8-year mortgage for 5%, what is the value of assuming this mortgage?

  The annual risk-free rate

Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.71 and Kr 5.86, respectively. The annual risk-free rate in the United States is 3.51 percent, and the annual risk-free rate in Norway is 5.21 percent.

  Compute the prospective rate of return before tax

A project has an initial cost of $140,000 and an estimated salvage value after 16years of$80000. Estimated average annual recipts are $26,000. Estimated average annual disbursement are $16,000. Assuming that annual receipts and disbursement will be u..

  Expected to result in after-tax cash flows

A company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $18,000 the first year, $20,000 the second year, $23,000 the third year, -$8,000 the fourth year, $30,000 the fifth year, $36,000 the sixth year..

  Vast resources available to mutual fund managers

Given the vast resources available to mutual fund managers, these managers on average have generally:

  Find the nominal interest rate for a debt security

Find the nominal interest rate for a debt security given the following information: real rate = 2%, liquidity premium = 2%, default risk premium = 4%, maturity risk premium = 3%, and the inflation premium = 3%.

  To keep a list of complete details for all sources

1- Identify your company's mission, vision, objectives, and posted strategies. You may need to consult outside resources, so be sure to keep a list of complete details for all sources you use.

  Equipment is depreciated straight-line to zero book value

Thornley Machines is considering a 3-year project with an initial cost of $660,000. The project will not directly produce any sales but will reduce operating costs by $400,000 a year. The equipment is depreciated straight-line to a zero book value ov..

  Estimate the daily volatility

Suppose that observations on a stock price (in $) at the end of each of 15 consecutive days are as follows: Estimate the daily volatility

  The value chain and strategic cost analysis

Clarion Products raises trees, cuts the trees into logs, and processes the logs into paper. Clarion Products sells the paper to a distributor, who then sells the paper to printers. Compute the profits of each stage of the value chain. Show amounts in..

  Compare the work done with the specifications provided

Ace contracted with Jones to do certain remodeling work on the building owned by Jones. Jones supplied the specifications for the work. The contract price was $70,000. After the work was completed, Jones was dissatisfied and had Clay, an expert, comp..

  What is your annualized cost of credit

You fall on hard times and take out a payday loan. The deal is as follows; you borrow $500 and must pay it back in 10 days. The interest charged on the loan is $10 and the lender requires a $3 loan origination fee. What is your annualized cost of c..

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