The required rate of return of the investment

Assignment Help Financial Management
Reference no: EM131447038

1. Company CS paid cash dividends of $1 per share. The management of the company estimates that the growth rate of dividends is 20% per year for the next ten years. After that the growth rate of dividends is expected to be 10% per year to infinity. What should be the price of the stock if the required rate of return of the investment is 15%?





2. Martin’s Inc. has paid an annual dividend of $2.50 a share. The dividends are expected to grow at 10% for the next five years. After that, dividends are expected to increase by 3% annually. What is the current value of this stock to you if you require a 9% rate of return on this investment?





Reference no: EM131447038

Previous Q& A

  Make any dfa in jflap software and run for several inputs

Make any DFA in JFLAP software and run for several inputs. Take a screen shot and include in your assignment. Keep in mind that this assignment is meant to make you all get familiar with this software.

  Developing a set of canned responses to common questions

Media Skills: IM; Compositional Modes: Tutorials [LO-1] [LO-4] High-definition television can be a joy to watch-but, oh, what a pain to buy. The field is littered with competing technologies and arcane terminology that is meaningless to most consu..

  Shipping manager who has worked for galaxy toys

In the first assignment, students are given a scenario in which the shipping manager who has worked for Galaxy Toys, Inc. since 1969. The scenario serves to set the stage for students to demonstrate how management theories have changed over time. ..

  What day does the account first exceed

On the first day of each month, starting January 1, 1995, Smith deposits 100 in an acount earning i(12)=0.09, with interest credited the last day of each month. In addition,Smith deposits 1000 in the account every December 31. On what day does the ac..

  Purpose of pro forma statements

Debbie and her supervisor have moved to the topic of pro formas. Discuss the purpose of pro forma statements and how they may benefit Debbie.

  How was hitler able to consolidate and increase his power

Hitler's rise to power in Germany seems to have been one of the most improbable events of recorded history. How do we account for it? That is, how did the conditions in Germany, Hitler himself, and the actions of the other European nations all com..

  Strategic planning and strategic management

The purpose of this assignment is to help students understand strategic business terminology (vision, mission, goals, objectives, specific objectives, internal and external scanning), to recognize the components of a strategic plan and to be famil..

  What the ratios calculations show

Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers.

  Identify the type of behaviour

Media Skills: Email; Message Strategies: Negative Messages [LO-3] Chapter 9 Many companies operate on the principle that the customer is always right, even when the customer isn't right.

  Managing employees for competitive advantage

The template provided for the Mid-Term will assist you in ensuring that you are meeting APA paper guidelines. Your goal in this project is to synthesize all your resources learned and demonstrate your knowledge by addressing,  discussing, comparin..


Write a Review


Similar Q& A

  Calculate the tax cost of partnership earnings this year

Kari is a partner in Lizard Partnership. This year, Kari's share of partnership ordinary income is $20,000 and she received a cash distribution of $30,000. Kari's tax basis in her partnership interest at the beginning of the year was $50,000. Her mar..

  Why does the price level not generate an efficient situation

Will there be enough revenues to cover the cost of proving the public good?Show in a figure and explain.Why does this price level not generate an efficient situation?

  Each source of capital and weighted average cost of capital

Percent of capital structure: Debt 10% Preferred stock 5 Common equity 85 Additional information: Bond coupon rate 13% Bond yield to maturity 11% Dividend, expected common $ 7.00 Dividend, preferred $ 14.00 Price, common $ 70.00 Price, preferred $ 11..

  Overhead is applied on the basis of machine hours

Overhead is applied on the basis of machine hours. It takes 3 machine hours to produce a large doll house and 2 machine hours to produce a small doll house. EDHC produces 2,000 large doll houses and 10,000 small doll houses in a year. Total manufactu..

  Does the project make sense at a discount rate

Suppose a project costs 200,000 today, 100,000 next year and 15000 to dispose of it in ten years when the project is discontinued. Once finished three years from today, it is expected to generate a net income of 40000 per year until it is discontinue..

  Bonds make semiannual payments-preferred stock

Information on Janicek Power Co., is shown below. Assume the company’s tax rate is 35 percent. Debt: 10,000 8.6 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 96.5 percent of par; the bonds make semiannual payme..

  Bank account at the beginning of next month

Lauren plans to deposit $9000 into a bank account at the beginning of next month and $150/month into the same account at the end of that month and at the end of each subsequent month for the next 6 years. If her bank pays interest at a rate of 3%/yea..

  What is the firm cost of preferred stock

Grill Works and More has 6 percent preferred stock outstanding that is currently selling for $44 a share. The market rate of return is 8 percent and the firm's tax rate is 33 percent. What is the firm's cost of preferred stock?

  Considering leasing new robotic milling control system

Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The system would cost $1,050,000 to buy and w..

  What is the current price of the bond

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon r..

  Are the tax obligations from debt a risky asset

For a firm without default, are the tax savings from debt a risky asset? - For a firm without default, are the tax obligations from debt a risky asset?

  How will the bonds price change in percentage terms

A bond has duration of 5.5 years. Its current market price is $980. Interest rates in the market are 4 percent today. It has been forecasted that interest rate will rise to 5 percent over the next couple of weeks. How will the bond's price change in ..

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