What is the current price of the common stock

Assignment Help Financial Management

Reference no: EM13878756

Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects sales and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in sales and dividends to zero, i.e., g = 0. The company’s last dividend, D₀, was $1.25, required rate of return on the stock is 9.60%. What is the current price of the common stock?

Formula and Answer.

Reference no: EM13878756

Questions Cloud

How much should an investor pay for each bond : A corporation has promised to pay $1,000 20 years from today for each bond sold now. No interest will be paid on the bonds during the 20 years, and the bonds are discounted at an interest rate of 7%, compounded semiannually. Approximately how much sh..

What is the current stock price if we anticipate dividends : Caldwell Inc. just paid a dividend of $.73. Its stock has a dividend growth rate of 5.62% and a required return of 10.21%. What is the current stock price if we anticipate dividends stopping in 20 years?

Calculate the total cost and direct material variances : Calculate the following variances and associated subvariances for April: total cost; Direct material; Direct labour; Variable overhead; Fixed overhead.

Compute future values : The Wildwood Fund sells Class A shares with a front-end load of 5% and Class B Shares with 12b-1 fees of 6.0% annually but no load. If you plan to sell the fund after 7 years, are Class A or Class B shares the better choice? Assume a 15% annual retur..

What is the current price of the common stock : Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects sales and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the grow..

Dollar lottery would you take the lump sum amount : If you won a 50 million dollar lottery would you take the lump sum amount or twenty five year annuity? Explain why and calculations. Estimated taxes are 30% and the interest rate in 10%. Include reasoning behind the answer.

Identify at least four risks that could jeopardize wedding : Identify at least four risks that could jeopardize the wedding and create a risk assessment matrix including a response plan for each of the risks.

Define the importance of time value of money : Define the importance of time value of money including compounding (future value), discounting (present value) and annuities. Why do organization leaders need to understand these concepts?

An assignable loan contract executed : An assignable loan contract executed 3 months ago requires two payments of $3,900 plus interest at 9% from the date of the contract, to be paid 4 and 8 months after the contract date. The payee is offering to sell the contract to a finance company in..

User Account

All Pages