Using the perpetual growth method

Assignment Help Financial Management
Reference no: EM131016045

Suppose the dividends for the Seger Corporation over the past six years were $3.04, $3.12, $3.21, $3.29, $3.39, and $3.44, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk premium is 9.0 percent, Treasury bills yield 4.3 percent, and the projected beta of the firm is .97.

Reference no: EM131016045

Questions Cloud

Assume that there is no maturity risk premium : A 5-year Treasury bond has a 3.05% yield. A 10-year Treasury bond yields 6.05%, and a 10-year corporate bond yields 9.6%. The market expects that inflation will average 3.3% over the next 10 years (IP10 = 3.3%). Assume that there is no maturity risk ..
Outstanding amount on an adjustable rate : Assume you have a $150,000 outstanding amount on an adjustable rate loan from BCN bank, which amortizes over 10 years. Your monthly payment is based on 1% over the current 10 year treasury rate or roughly 2.98% APR. Your monthly income allows you to ..
Money purchase pension plan for its eligible employees : Accent, Inc. sponsors a 25% money purchase pension plan for its eligible employees. Carlos earns $200,000, Kevin earns $60,000, Kelly earns $300,000, and Rick, who is ineligible, earns $27,000. What is Accent's required deductible contribution for th..
Calculate the equivalent annual cash flows the project : Allied Products, Inc., is considering a new product launch. The firm expects to have annual operating cash flow of $9.5 million for the next eight years. After the first year, the project can be dismantled and sold for $26.5 million. If the estimates..
Using the perpetual growth method : Suppose the dividends for the Seger Corporation over the past six years were $3.04, $3.12, $3.21, $3.29, $3.39, and $3.44, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk pre..
Example of which economic downturn process : You are a rancher who purchased cattle last summer. The purchase price was $2,500 for two head of cattle (2 cows). You borrowed $30,000 at 4% interest for 1 year from your bank to purchase 12 head of cattle. After feeding and taking care of your 12 c..
Settled an insurance claim : You just settled an insurance claim. The settlement calls for increasing payments over a five-year period. The first payment will be paid one year from now in the amount of $7,000. The following payments will increase by 3.5 percent annually. What is..
Difference in present value if you receive these payments : You are scheduled to receive annual payments of $10,000 for each of the next 24 years. Your discount rate is 8 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of ..
New sports car from muscle motors : You want to buy a new sports car from Muscle Motors for $84,000. The contract is in the form of a 60-month annuity due at an APR of 7.55 percent. What will your monthly payment be?

Reviews

Write a Review

 

Financial Management Questions & Answers

  Do you think raven ltd should hedge its remittance

Based on this information, do you think Raven Ltd should hedge its remittance of expected Japanese yen profits to the UK parent by selling yen forward contracts? Why would this strategy be advantageous?

  Doing so will result in increasing the value of the stock

Evaluate the following statement: "Managers should not focus on the present stock value of the company. Instead, they should focus on the profitability of the company. Doing so will result in increasing the value of the stock.

  Calculate the market risk premium

A stock has the same level of systematic risk as the market. The stock has an expected return of 14%. The risk free rate is 5%. Calculate the market risk premium.

  Save money to meet three objectives

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $26,500 per month for 25 years, with the first payment received 30 years and 1 month from now.

  Explain residual income-free cash flow-discounted dividends

Explain residual income, free cash flow, discounted dividends in terms of accuracy, forecast ability of inputs, and stability (on a relative & absolute basis)

  Identifying operating exposures-management must recognize

In this module, you were introduced to identifying operating exposures that management must recognize. If your company was contemplating moving operations overseas, explain your rationale as to what country you would recommend the company expand to a..

  Equity discount rate must firm be using to value acquisition

Anacott Steel is acquiring Terafly Incorporated. Terafly is expected to provide Anacott with operating cash flows of $12, $21, $16, and $9 million over the next four years, respectively. In addition, the horizon value of all remaining cash flows at t..

  Requires an initial fixed asset investment

Summer Tyme, Inc., is considering a new 4-year expansion project that requires an initial fixed asset investment of $1.458 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthl..

  Assume the market is in equilibrium with required return

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.50 coming 3 years from today. what is..

  Explore the video tab by using the key term

Go to www.cnbc.com and explore the video tab by using the key terms reporting and estimate. As you learned in this unit, there are various sources of information. Watch at least two videos you find, list the videos you viewed and provide a summary of..

  Impact short-run inflation and output byaltering

Given a firms liabilities an increase in interest rates reduces thefirm's net worth because - difficult to keep inflation and output fromfluctuating when aggregate expenditures change because

  What is the current value of a share of highland stock

What is the current (time 0) value of a share of Highland stock? What value would you project for a share of stock at the beginning of year 3?

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