Determine expected rate of return on the stock

Reference no: EM1347178

Horse and Buggy Inc, is a declining industry. Sales, earnings, and dividends are all shrinking at rate of 10% per year.

a. If r=15% and DIV1= $3, what is the value of share?
b. What price do you forecast for the stock next year?
c. What is the expected rate of return on the stock?
d. can you distinguish between "bad stocks" and "bad companies"? Does the fact that the industry is declining mean that the stock is a bad buy?

Reference no: EM1347178

Questions Cloud

Knowledge management systems important-modern organization : Describe in scholarly detail why knowledge management systems would be so important to a modern organization where the organization would initiate.

Discuss stock market crash : Discuss and explain at least three reasons that can be learned from the stock market crash of 2002 in the applied business world?

Discussion on product costing : Some firms have a lot of fixed costs and a few variable costs, while other firms are configured the other way around. What effect do you think the existence of a high proportion of fixed costs has on the desirability of using ABC methods?

What is an equilibrium temperature reached by closed system : A 100g wire is held under a tension of 250N with one end at x = 0 and other x = 10m. At time t = 0, pulse 1 is sent along the wire from the end at x = 10 m. At time t = 30 ms, pulse 2 is sent along the wire from the x = 0. At what position x do the..

Determine expected rate of return on the stock : Horse and Buggy Corporation, is a decreasing industry. Sales, earnings, and dividends are all shrinking at rate of 10 percent per year. Determine expected rate of return on the stock.

Program in basic which prompts user to input two integers : Write down the program by using Small Basic which prompts the user to input two integers: firstNum and secondNum (firstNum must be less than secondNum).

Determine the selling price : Trend-Line corporation has been growing at a rate of 6 percent per year and is expected to continue to do so indefinitely. The next dividend is expected to be 5 dollar per share. Determine the selling price.

Knowledge-activity based costing : City of Joseph Commercial Bank hired consultants to compute the costs of three products: checking accounts, personal loans, and the Gold visa card. The consultant identified the following activities, costs and activity drivers (annual data):

Proprietary theory and the entity theory : Compare and contrast the proprietary theory and the entity theory - Please compare and contrast the proprietary theory and the entity theory.

User Account

All Pages