Compute expected price of the stock in a year

Assignment Help Finance Basics
Reference no: EM1363995

A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at 5 percent per year thereafter. The expected rate of return on the stock is 12 percent.

a. What is the current price of the stock?
b. What is the expected price of the stock in a year?
c. Show that the expected return, 12 percent, equals dividend yield plus capital appreciation.

 

Reference no: EM1363995

Questions Cloud

Determine its average velocity for this trip : Determine its average velocity for this trip. conclude the car's displacement.
Field of radiologic technicians-allied health profession : Describe the field of radiologic technicians as an allied health profession and what their job title is. Include in this discussion information on training, their professional role, and other aspects of interest.
Relationship between receivables and cash : What is the relationship between receivables and cash? What is their influence on liquidity and solvency? How do they affect competitiveness? Why are sales revenue and gross margin so important?
Show performance appraisal and evaluation : Would it be harder to rate the instructors' performance or to rank their performance and write three items to use in rating the instructors--one each to rate them in terms of an attribute, a behaviour, and an outcome.
Compute expected price of the stock in a year : A Corporation will pay a $2 per share dividend in one year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at 5% each year thereafter.
Explain the productivity and partial measure productivity : Explain the differences between productivity and its subcomponents total measure productivity and partial measure productivity
Find the charge on each electrode : What is the charge on each electrode.
Possible consequences to an organization : What are the possible consequences to an organization that has glass ceiling and How can employee development break the glass ceiling?
Best and least expensive solution for faulty modem port : When troubleshooting a motherboard, you discover the modem port no longer works. What is the best and least expensive solution to this problem?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Time value of money-retirement fund

Kay Mart owns an annuity that will begin making semiannual payments of $7500 in perpetuity to her or her heirs. The first payment will take place 3 years and 6 months from today. She is considering selling the annuity to an investor whose required..

  Computation of future contract value

Computation of future contract value and what is the farmer's net proceeds when corn is sold

  Compute-net worth per share

Hoover Inc. has current assets of $360,000 and fixed assets of $640,000. Current liabilities are $90,000 and long-term liabilities are $160,000.

  Computing maximum one month loss of currency portfolio

Compute the maximum one month loss of currency portfolio? Use 97% confidence level and suppose monthly percentage change for each currency are normally distributed.

  Determine the best payment option for car finance

You need a new car and the dealer has offered you a price of $20,000, Determine the best payment option for car finance.

  Find earnings per share of common stock

Abc Corporation's net income last year was $550,000. The corporation has 150,000 shares of common stock and 50,000 shares of preferred stock outstanding.

  Securities markets-start-up financing

What agencies regulate securities markets? How are start-up firms usually financed? Differentiate between a private placement and a public offering.

  Hadlock industries cash flow

Determine Hadlock Industries' Cash Flow from Financing for the year ending 6/30/2011

  Calculate the total variable costs

A firm is reviewing a project with labor cost of $9.90 per unit, raw materials cost of $22.63 a unit, and fixed costs of $8,000 a month.  Calculate the total variable costs of the project.

  Domestic versus eurobond borrowing costs

A firm can issue an 8 year public debt issue at par with an 11 percent coupon in the domestic market. It can also issue 11.25 percent Eurobonds. If all other expenses are equal, which issue offers the firm the lower borrowing cost?

  Compute the amount needed to fund

Upon completion of her introductory finance course Marla lee was so pleased with the value of useful and interesting knowledge she gained that she convinced her parents,

  Discuss medicare and financial state

Since Congress passed Medicare in 1965, the program has been subject of countless debates on topics ranging from reimbursement rates to the potential bankruptcy of Medicare.

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