Computation of value of the stock using constant growth

Assignment Help Finance Basics
Reference no: EM139607

Calculation of value of the stock using constant growth model.

The Kummins Engine Company common stock has a beta of 0.9. The current risk-free rate of return is 5% and the market risk premium is 8%. The CEO of the company is quoted in a pres release as saying that the firm will pay a dividend of $0.80/share in the coming year and expects the dividends to grow at a constant rate of 7% for the foreseeable future. Using the constant growth model, what value would you assign to this stock?

Reference no: EM139607

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Pay some university expenses

Portfolio's beta is 1.5. Thomas is allowing for selling particular stock to aid pay some university expenses.

  Calculate dahl''s 20x6 consolidated net income

Calculate Dahl's 20X6 consolidated net income and identify the amount attributable to Dahl's shareholders and to the non-controlling interest.  Be sure to show all your calculations.  You are not required to prepare a consolidated income statement.

  Evaluate the total patient revenue for february

Evaluate the following values: Total patient revenue for February, collection of February charges in February

  Determine the present value of the offers

Determine the present value of each of the three offers and then show which one has the highest present value.

  Present and defend the budget

Given a description of a new business, new product, service or project develop, present and defend the budget.

  Consolidated balance sheet at acquisition date

Consolidated Balance Sheet at Acquisition Date and Consolidated Financial Statements Subsequent to Acquisition

  Develop plan that will generate an adequate amount of money

Develop a plan that will generate an adequate amount of money to retire at age 55 (if you are currently in your early twenties. If you are older, then you may provide an appropriate retirement age). Complete the analysis out to age 95 to ensure ..

  Sovereign mines investment analysis

Sovereign Mines Investment Analysis

  Explain in general terms the accounting treatment

Explain in general terms the accounting treatment to changes in terms of existing loans,  What should be the accounting treatment of the modification to Blueberry’s note?

  Write a two-page policy brief

Describe how ‘sin’ taxes have changed in your state over time.  How does this compare to other states in your region and how does the level of the ‘sin’ taxes in your state compare to the national average?

  Violet isaacsongave jeanne collection of coin

One month before she died on April 14, 2002, Violet Isaacson (Jeanne's mother) gave Jeanne collection of coin.

  Business owners equity at commencement of year

If opportunity cost of capital is 14%, compute the present value of business owners' equity at commencement of year.

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