According to the dividend discount model

Assignment Help Financial Management
Reference no: EM131014152

A firm is expected to pay a dividend of $3.10 per share every year in the foreseeable future. Investors require a return of 12% on the firm's stock. According to the dividend discount model, what is a fair price for the firm's stock?

Reference no: EM131014152

Questions Cloud

What was the variance of crash-n-burns returns : You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 5 percent, -10 percent, 28 percent, 19 percent, and 15 percent. What was the arithmetic average return on Crash-n-Burn’s stock over this five year period..
Result in initial aftertax cash savings : Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.84 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. What is the maximum initial cost of company..
How we live and interact with one another : After watching it, please think carefully about the following phrase: "New technologies have changed how we live and interact with one another"; "Everybody lies on the Internet"
What profit margin must the firm achieve : Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 9.5 percent a year, a debt-equity ratio of .49, and a dividend payout ratio of 28 percent. The ratio of total assets to sales is constant at 1.26. What profit margin must the fir..
According to the dividend discount model : A firm is expected to pay a dividend of $3.10 per share every year in the foreseeable future. Investors require a return of 12% on the firm's stock. According to the dividend discount model, what is a fair price for the firm's stock?
What is the south carolina department of consumer affairs : What is the South Carolina Department of Consumer Affairs and what do they do? Name one business that is on the "Buyer Beware" list closest to your hometown
What is the political message of each movie : Compare and contrast the following three movies: Dr. Strangelove, All the President's Men, and Norma Rae. Discuss the political content of these films. What is the political message of each movie
How environmental conditions caused the town : Explain what changing environmental conditions could have caused the shutdown of the power station -  How do you think the changes in the environment affected the operations of a vegetable farmer?
Perform bonferroni or another multiple comparisons procedure : In a similar manner, two loaves were stored for three, ?ve, and seven days before measurements were taken. The units are milligrams of vitamin C per hundred grams of ?our (mg/100 g).10 Here are the data:Explain why it is inappropriate to perform ..

Reviews

Write a Review

Financial Management Questions & Answers

  How many years is it until this bond matures

The Lo Sun Corporation offers a 6.0 percent bond with a current market price of $809.50. The yield to maturity is 8.24 percent. The face value is $1,000. Interest is paid semi-annually. How many years is it until this bond matures?

  Calculate the free cash flow

Calculate the free cash flow.

  Expected return-market risk premium-reward-to-risk ratios

Stock Y has a beta of 1.4 and an expected return of 15.1 percent. Stock Z has a beta of .7 and an expected return of 8.6 percent. If the risk-free rate is 5 percent and the market risk premium is 6.5 percent, the reward-to-risk ratios for stocks Y an..

  Company cost of preferred stock for use in calculating wacc

How much would $5,000 due in 25 years be worth today if the discount rate were 5.0%? Bosio Inc.'s perpetual preferred stock sells for $97.50 per share and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would i..

  What would be the future value of your investment

You are planning to invest $2,500 today for three years at nominal interest rate of 9 percent with annual compounding. What would be the future value of your investment?

  What are separately stated items

What are separately stated items on a K-1? Why is it necessary to separate these items from ordinary income

  Depreciated straight-line to zero over its seven-year life

Your firm is contemplating the purchase of a new $759,500 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $49,000 at the end of that time. Suppose your required return..

  Determine the? p-value for this test and critical? z-score

Consider the hypotheses shown below. Given that x overbar = 113, σ=25?, n=48, α=.10?, complete parts a and b. Upper H 0H0?: μ=119 Upper H 1H1?: μ ≠119. What conclusion should be? drawn? b. Determine the? p-value for this test. The critical? z-score(s..

  What is the bonds after-tax yield

An investor recently purchased a corporate bond which yields 9%. The investor is in the 36% combined federal and state tax bracket. What is the bond's after-tax yield?

  Depreciation expense for using straight-line method

Huffman corporation construct a building at cost of $20 million. Average accumulated expenditures were $8 million, actual interest was $1,200,000, and avoidable interest was $100,000. If the salvage value is $1,600,000, and it useful life is 40 years..

  What should your investment be worth in one year

You have $10,000 to invest and you are considering investing in a fund. The fund charges a front-end load of 5.75% and an annual expense fee of 1.25% of the average asset value over the year. You believe the fund's gross rate of return will be 11% pe..

  Estimated market value of the promised payment at maturity

A “century” bond has a 6 percent coupon rate and makes semiannual payments ($30 every six months). The yield to maturity is 4 percent and the maturity date is December 11, 2115. You should assume that today is December 11, 2015. What is the estimated..

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