What is stock price today-required rate of return on stock

Assignment Help Financial Management
Reference no: EM131186361

John is evaluating a stock that he believes will pay a dividend equal to $2.45 in exactly one year from today. Further, John expects that in addition to the dividend he will be able to sell the stock for the amount $48 per share also one year from today. Using this information, what is the stock's price today if the required rate of return on the stock is 11.00%?

Reference no: EM131186361

Questions Cloud

What is the net profit or loss on your position : Suppose you buy an August expiration put option on Apple stock with an exercise price of $600, and paid $24 for it. Now suppose the stock price in August is $610. Will you exercise your put? What is the net profit or loss on your position?
Futures contract for corn is currently trading : The March futures contract for corn is currently trading at $3.75 per bushel. Suppose you buy ten contracts for March delivery. If the contract closes in March at 3.875, what will your profit be (Each contract calls for delivery of 5,000 bushels of c..
Machines have the same production speed and capacity : Machine A costs $15,000 and will last 5 years, at which time the value of the machine is $5,000 (it is worth $7,000 in 4 years). Machine B costs $12,000 and will last 3 years, after which the machine is worth $4,000. If both machines have the same pr..
Found three acceptable investment opportunities : Bass Frozen Foods, Inc. has found three acceptable investment opportunities. What portion of the new investments will be financed by common equity and what portion by debt? According to the residual dividend theory, how much would be paid out in divi..
What is stock price today-required rate of return on stock : John is evaluating a stock that he believes will pay a dividend equal to $2.45 in exactly one year from today. Further, John expects that in addition to the dividend he will be able to sell the stock for the amount $48 per share also one year from to..
What was the fund turnover : A mutual fund sold $75 million of assets during the year and purchased $99 million in assets. If the average daily assets of the fund were $316 million, what was the fund turnover?
Undertake some silvicultural activities to increase yield : You recently purchased some immature timberland that is forty years from being harvested. You expect to get $438/MBF when you harvest the timber. Prior to harvesting, you have two objectives. You hope to come up with a plan to generate some annual re..
Realized return is known as the holding period yield : The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). What price will your bond sell for? W..
Fund has current assets with market value : The World Income Appreciation Fund has current assets with a market value of $11.7 billion, 350 million shares outstanding, and a current market price quotation of $35.08. Calculate the front-end load.

Reviews

Write a Review

Financial Management Questions & Answers

  Though the real estate market has been depressed in some

though the real estate market has been depressed in some countries due to the aftermath of the global financial crisis

  What is the company WACC

The total book value of WTC’s equity is $8 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 11%. The firm’s bonds have a face value of $4 million and sell at a price of 110% of face valu..

  Compute the percentage total return

Suppose a stock had an initial price of $70 per share, paid a dividend of $1.35 per share during the year, and had an ending share price of $88. Compute the percentage total return.

  Planning to save for retirement

You are planning to save for retirement over the next 25 years. To do this, you will invest $760 a month in a stock account and $360 a month in a bond account. The return of the stock account is expected to be 9.6 percent, and the bond account will p..

  More efficient model with longer life expectancy

A company wants to replace a machine with a modern, more efficient model with a longer life expectancy. The equipment requires an initial investment of $600,000 in Year 0. The firm's WACC is 16% and the risk-free rate is 6%. The analyst develops the ..

  Considering the purchase of a new manufacturing facility

Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $284,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years..

  Inventory costing method

Which inventory costing method should a company use when it wants to minimize taxes? Does your response depend on whether prices are rising or falling? Explain your answer.

  Just beginning to save for retirement

You are now 20years old and just beginning to save for retirement. If your retirement account will earn 6% compounded monthly and you plan to retire at age of 50 with $1200000, how much do you need to invest each month in order to reach your retireme..

  Capital asset pricing model and the dividend valuation model

Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity).

  Why do the differences in the pvs occur

Find the present value of $700 due in the future under each of these conditions: 10% nominal rate, semi annual compounding, discounted back 5 years. Why do the differences in the PVs occur?

  The cost of equity and flotation costs

Messman Manufacturing will issue common stock to the public for $40. The expected dividend and growth in dividends are $2.75 per share and 5%, respectively. If the flotation cost is 14% of the issue's gross proceeds, what is the cost of external equi..

  How much is the monthly payment of the mortgage

Eric just bought a house yesterday in Thunder Bay. The house was listed at $285,000 and Eric made a down payment of $50,000 and took out a 25-year mortgage to finance the purchase. The quoted interest rate is 5% and the first mortgage payment is in o..

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