Required rate of return on equity

Assignment Help Financial Management

Reference no: EM131089229

Your company paid a dividend of $3.00 last year (D0 =3.0). The growth rate is expected to be 10 percent for first year, 8 percent the second year, then 7 percent for the third year, and then the growth rate is expected to be a constant 6 percent thereafter. The required rate of return on equity (rs) is 10 percent. What is the company’s current stock price (i.e., intrinsic value)?

Reference no: EM131089229

Questions Cloud

European union current asylum policy : What is the existing policy? What are its primary components? What are the problems with the existing policy? What challenges are being posed to the existing policy?

What is the average tax rate for firm with taxable income : The tax rates are as shown. Taxable Income Tax Rate $0 – 50,000 15% 50,001 – 75,000 25% 75,001 – 100,000 34% 100,001 – 335,000 39% What is the average tax rate for a firm with taxable income of $127,013?

Issue preferred stock with perpetual annual dividend : App Inc plans to issue preferred stock with a perpetual annual dividend of 10% of par value and a par value of $25. If the required return on this stock is currently 8%, what should be the preferred stock’s market value?

What is the standard deviation of this stock return : You estimate the economy will be really booming next year with 30% probability, and normal with 70% probability. Your analysis of an airline company suggests that the company stock will return 15% if the economy booms, and only 6% if the economy is n..

Required rate of return on equity : Your company paid a dividend of $3.00 last year (D0 =3.0). The growth rate is expected to be 10 percent for first year, 8 percent the second year, then 7 percent for the third year, and then the growth rate is expected to be a constant 6 percent ther..

Forecast the value of the cyprus pound : Small Corporation would like to forecast the value of the Cyprus pound (CYP) five years from now using forward rates. Unfortunately, Small is unable to obtain quotes for five year forward contracts. However, Small observes that the five year interest..

What is your breakeven stock price at maturity : You sell a call option on a share of stock for a premium of $4. The current market price of the stock is $47 and the strike price on the option is $50. What is your break – even stock price at maturity?

What is the capital structure weight of the firms debt : LibreOffice has 85,000 shares of common stock outstanding at a price of $62 a share. They also have 10,000 shares of preferred stock outstanding at a price of $85 a share. The firm has 10,000 8 percent, 20 - year bonds outstanding, with a face value ..

What is the firm cost of equity : Wicd Co. just paid its first annual dividend of $.60 a share. The firm plans to increase the dividend by 1.5 percent per year indefinitely. What is the firm's cost of equity if the current stock price is $9.87 a share?

User Account

All Pages