Annual dividend of per share on its common stock

Assignment Help Operation Management

Reference no: EM13956152

ABC Inc. currently pays an annual dividend of $3 per share on its common stock. As the company expands their business into the global market, they expect dividend to grow at a supernormal rate of 20% for the next three years. After that, the dividend is expected to grow at a normal rate of 5%. Assume the interest rate is 10%, what is the current stock price?

A. $75.25

B. $86.33

C. $89.66

D. $92.53

Reference no: EM13956152

Questions Cloud

Currently pays an annual dividend : Sam Houston Inc. currently pays an annual dividend of $5. The dividend is expected to grow at a constant rate of 5%. If the interest rate is 10%, what is the current stock price?

What would be the after-tax amount : Assume that Jane Adams pays income taxes at a 35 percent rate. What would be the after-tax amount on $100 of interest income she receives?

After we form a diversified portfolio : After we form a diversified portfolio, there is still certain amount of risk left in our investment there. Which is this type of risk?

Discount yield is always higher than bond equivalent yield : Discount yield is always lower than bond equivalent yield on the same security. Discount yield is always higher than bond equivalent yield on the same security. Discount yield is always equal to bond equivalent yield on the same security. Discount yi..

Annual dividend of per share on its common stock : ABC Inc. currently pays an annual dividend of $3 per share on its common stock. As the company expands their business into the global market, they expect dividend to grow at a supernormal rate of 20% for the next three years. After that, the dividend..

How control weaknesses can lead to fraud : In your Discussion, you will be faced with a potentially fraudulent situation. This is something that you might face in your auditing career as well. How would you handle these types of difficult situations? As a new auditor, how would you respond to..

Use the net present value of cooperative net income : Describe how you could use the net present value of cooperative net income to gauge the health of a cooperative. How could you use the net present value of owner’s common stock to gauge the health of your cooperative. Will these two measures ever giv..

What is the beta of stock : Of the 10,000 invested in a two-stock portfolio, 40% is invested in stock A and 60% is invested in stock B. If stock A has a beta equal to 2.0 and the beta of the portfolio is 1.4, what is the beta of stock B? (Show work please!)

Portfolio equally invested in risk-free asset and two stocks : You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.53 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

User Account

All Pages