What is the estimated value per share of the firms stock

Assignment Help Business Economics
Reference no: EM131011478

Assume that the average firm in your company's industry is expected to grow at a constant growth of 6% and its dividend yield is 7%. Your company is as risky as the average firm in the industry. However, it has successfully completed some R&D work with investors expecting its earnings and dividends to grow 50% this year, 25% in the following year, with growth returning to the industry average of 6% in the third year and afterwards. If the last dividend paid (D0) was $1.00 per share, what is the estimated value per share of the firm's stock?

Reference no: EM131011478

Questions Cloud

What is the maximum age of a fossil : Suppose the minimum detectable amount is 0.1% and a dinosaur is dated with 40K to be 69 million years old. Is this possible? What is the maximum age of a fossil that we could date using 40K?
Find some probabilities : Find the probability that a randomly selected student is a male binge drinker, and ?nd the probability that a randomly selected student is a female binge drinker.
What is a software application designed : What is a software application designed to help an enterprise select employees more efficiently?
Compare and contrast two learning theories : Compare and contrast two learning theories. Which one do you believe is most effective? Why? When asked to compare and contrast we are looking for the learner to analyze the differences and/or similarities between two distinct subjects.
What is the estimated value per share of the firms stock : Assume that the average firm in your company's industry is expected to grow at a constant growth of 6% and its dividend yield is 7%. Your company is as risky as the average firm in the industry. what is the estimated value per share of the firm's sto..
Understand the financial status of the governmental entity : Is there any information that you find particularly interesting or unique to this entity?
What is the better option if the discount rate : A firm can lease a truck for 4 years at a cost of $30,000 annually. It can instead buy a truck at a cost of $80,000, with annual maintenance expenses of $10,000. The truck will be sold at the end of 4 years for $20,000. What is the better option if t..
Can organization continue to grow forward without one : If you were in charge of a human resources department what are the top three things that you would like top leadership to understand about the department, and why?
How much is principal amortization : What will be the monthly payment if you borrow with a $100,000 15-year mortgage at an interest rate of 1% per month? How much of the first payment is interest? How much is principal amortization?

Reviews

Write a Review

 

Business Economics Questions & Answers

  A car manufacturing company adopts a new technology that

A car manufacturing company adopts a new technology that, ceteris paribus, increases the productivity of capital. At the same time, workers unionize and demand higher wages. Assume that for this firm capital and labor are substitutable. Which of the ..

  Calculate profit-maximizing price-advertising expenditure

Suppose the demand for a new pharmaceutical drug, on which the manufacturer has a patent monopoly, is given by: Q(P,A) = (100 – P) ·A^0.5. Calculate the profit-maximizing price, advertising expenditure, and profits for the firm.

  Illustrate what prevents other firms from directly competing

Suppose Firm X is a monopolist and is receiving positive economic profits. Illustrate what prevents other firms from directly competing away the profits.

  Revenues from both products

You are the manager of a firm that receives revenues of $60,000 per year from product X and $90,000 per year from product Y. The own price elasticity of demand for product X is -1, and the cross-price elasticity of demand between product Y and X is 1..

  Saving obtained-eliminating present equipment and labor cost

The management of a private hospital is considering the installation of an automatic telephone switchboard, which would replace a manual switchboard and eliminate the attendant operator’s position. Disregarding inflation, how large an investment in t..

  What businesses and households both sellers

Distinguish between the resource market and product market in the circular flow model. In what way are businesses and households both sellers and buyers in this model.

  What is the firms total cost of producing

A firm is currently producing 50 units of output. At this level of output produced, its average fixed cost is 90 (AFC=90) and average variable cost is 140 (AVC=140). What is the firm's total cost of producing 50 units of output? If this firm increase..

  Coffee marketplace meet all six conditions of a perfectly

Does the coffee marketplace meet all six conditions of a perfectly competitive marketplace.

  Illustrate what will happen to aggregate demand

If the world economy expands so that foreign demand for U.S.-made goods increases, in the short run Illustrate what will happen to aggregate demand, the price level, and real GDP in the U.S..

  Qtax cut under fixed as well as flexible exchange rates1

q.tax cut under fixed as well as flexible exchange rates1 what is the impact of a tax cut in an economy operating under

  What are the potential harms and potential benefits

Explain how you would go about determining what are the potential harms and potential benefits of disclosing this information voluntarily Is there any information you feel cannot be included in the evaluation? What is it? Why can’t you include it?

  What happens to the money supply and the interest rate

Imagine that you run the central bank in a large open economy with a floating exchange rate. Your goal is to stabilize income, and you adjust the money supply accordingly. Under your policy, what happens to the money supply, the interest rate, the ex..

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