Company is expecting a growth rate

Assignment Help Financial Management
Reference no: EM13917606

A company is expecting a growth rate of 14% for the next two years due to a new invention. Thereafter it should level to an 8% growth rate. The last dividend paid was $.65 per share. What price should the stock sell for if investors require 12% return.

Reference no: EM13917606

Questions Cloud

Proposed cost-saving device has an installed cost : A proposed cost-saving device has an installed cost of $664,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. What level of pretax cost savings do we require for this pr..
Suppose your required return on project-pretax cost savings : Your firm is contemplating the purchase of a new $642,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. Suppose your required return on the project is 8 percent and your pretax cost sa..
Investment satisfies normal distribution with expected value : Assume that the annualized growth rate G of your investments satisfies a normal distribution with an expected value of v=7% and a standard deviation = 20%. What is the probability that you will triple your money after 5 years of investing? After 10 y..
Pretax operating costs-system requires initial investment : Kolby’s Korndogs is looking at a new sausage system with an installed cost of $882,000. This cost will be depreciated straight-line to zero over the project’s seven-year life, at the end of which the sausage system can be scrapped for $97,000. The sa..
Company is expecting a growth rate : A company is expecting a growth rate of 14% for the next two years due to a new invention. Thereafter it should level to an 8% growth rate. The last dividend paid was $.65 per share. What price should the stock sell for if investors require 12% retur..
Debt-common stock and preferred stock : You are given the following information concerning Parrot head Enterprises: Debt: 9,700 7.2 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 105.75. These bonds pay interest semiannually. Preferred stock: 8,700 shares..
How to profit given an expectation on currency movement : How to profit given an expectation on a currency movement
Considering the deductible and coinsurance : Lisa has an individual medical expense policy with a $2,000 calendar-year deductible, a $5,000 out-of-pocket limit, and a 30 percent coinsurance requirement. Lisa was hospitalized for a surgical procedure in March, her first health care treatment rec..
What is the cash flow from assets : You have gathered this information on JJ Enterprises: What is the cash flow from assets for 2015?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the real rate of return of large-cap stocks

Large- Cap stocks had the nominal rates of return of 13.20 percent. The rate of inflation during the last year was 4.07 percent. What is the real rate of return of large-cap stocks?

  Investments future value in terms of purchasing power

You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding. Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's fu..

  Analyse principles and trends in performance measurement

Identify and critically analyse principles and trends in Performance Measurement and Control and determine the different budgeting techniques and critically evaluate their use in short term decision making - Discuss the advantages and disadvantages o..

  Paid dividend per share

Could I Industries just paid a dividend of $1.05 per share. The dividends are expected to grow at a 20 percent rate for the next 6 years and then level off to a 5 percent growth rate indefinitely. If the required return is 13 percent, what is the val..

  What is the companys cost of equity capital

Skillet Industries has a debt–equity ratio of 1.4. Its WACC is 9.8 percent, and its cost of debt is 7.5 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital? What would the cost of equity be if the debt–equity r..

  Various school and living expenses

Pete Morton is planning to go to graduate school in a program of study that will take 3 years. Pete wants to have $16600 available each year for various school and living expenses. If he earns 6 percent on his money, how much must be deposit at the s..

  What is your total dollar return from this investment

You’ve just opened a margin account with $18,000 at your local brokerage firm. You instruct your broker to purchase 750 shares of Landon Golf stock, which currently sells for $78 per share. What is your total dollar return from this investment? What ..

  What are main elements in calculating the cost of capital

what are main elements in calculating the cost of capital? how would an increase in debt affect it? how would you

  Impact the rating of a bond

Which of the following would impact the rating of a bond?

  Fixed-rate mortgage-loan in form of single balloon payment

You need a 25-year, fixed-rate mortgage to buy a new home for $255,000. Your mortgage bank will lend you the money at a 5.5 percent APR for this 300-month loan. However, you can only afford monthly payments of $950, so you offer to pay off any remain..

  Bank required by law to report to potential borrowers

Tai Credit Corp. wants to earn an effective annual return on its consumer loans of 14.6 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers?

  Current bond price-bond on market that have left to maturity

Aloha Inc. has 7 percent coupon bonds on the market that have 12 years left to maturity. If the YTM on these bonds is 8.1 percent, what is the current bond price?

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