Dividend discount model in calculating the wacc

Assignment Help Finance Basics
Reference no: EM131911147

The question asks to use the dividend discount model in calculating the WACC. To determine the DDM Dividend per share (2.50)/Discount Rate (2%-4%=1.92%)-Dividend Growth Rate (4%)= 1.84 so 2.50/1.84%=135.87. Is 135.87 greater than the current price 50.00 then the stock is undervalued. Correct?

Reference no: EM131911147

Questions Cloud

Write a simplified version of a http client and server : Write a simplified version of a HTTP client and server. The client program will use the HTTP protocol to download a file from the server using HTTP GET method.
Calculate jen and berry company break-even point : Fixed advertising costs would increase by $55,600 per year. Calculate Jen & Berry Company's break-even point in number of cases
Describes what we know is effective drug treatment : What can a person do if they experience loss of control of their substance use and the negative impacts on their life?
Explain replacement algorithms for paged system : File are allocated disk space by the operating systems. Explain the three ways of allocating disk space.
Dividend discount model in calculating the wacc : The question asks to use the dividend discount model in calculating the WACC. To determine the DDM Dividend per share
Ceo of merck and pfizer : 1. What would you recommend to Richard Clark and Jeffrey Kindler as they become CEO's of Merck and Pfizer, respectively?
Prepare a trial balance as of the end of november : Nov. 2 The company received $4,833 cash from Liu Corporation for computer services performed. Prepare a trial balance as of the end of November
Planning to make annual deposits : You are planning to make annual deposits of $6,570 into a retirement account that pays 8 percent interest compounded monthly.
What is the payback period for investments : 1. What is the payback period for Investments 1 and 2? 2. What is the net present value of Investments 1 and 2?

Reviews

Write a Review

Finance Basics Questions & Answers

  Should the firm purchase the new stock

Should the firm purchase the new stock? At what expected rate of return should McAlhany be indifferent to purchasing the stock?

  Coming up with a computation

For the cost of equity the traditional formulas are the dividend capitalization model and the capital asset pricing model. I'm less interested in you getting perfect data than I am in you coming up with a computation and then interpreting what you..

  What is ment by term capital call deal flow due diligence

What is meant by the terms (a) Capital call,  (b) Deal flow, and (c) Due diligence?

  Determine the firms cost of equity capital

The Crumey Corporation, which expects to generate perpetual yearly operating cash flow of $800,000 per year, has a required return on assets of 10 percent. The market value of the firm's outstanding equity is $4 million dollars. The firm has $4 milli..

  Company cost of equity

Its last dividend was $2 per share; the stock sold for $40 per share just after the dividend was paid. What is the company's cost of equity?

  What is the expected return on an equally weighted portfolio

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?

  Ninja co issued 12-year bonds a year ago at a coupon rate

ninja co. issued 12-year bonds a year ago at a coupon rate of 7.8 percent. the bonds make semiannual payments. if the

  Compute the arithmetic average return

Using two companies you chose for your 1st assignment, you should answer the following questions. Compute the Arithmetic Average Return.

  Does age impact the amount of reduction in each measure

Does age impact the amount of reduction in each measure (weight, cholesterol level, fat intake, cholesterol intake, calories from fat)?

  Revive securitisation in europe

Why do you think there has been a strong push to revive securitisation in Europe? In particular, you should focus on the benefit that good securitisation will bring to the markets.

  Explain what are the benefits of obtaining the cfa charter

What are the benefits of obtaining the CFA charter? Present in detail at least a couple of charter holder's name, designation, location and their views, opinions, and thoughts about the value of earning the CFA certification.

  A corporation issued 350 shares of its 10 par value common

a corporation issued 350 shares of its 10 par value common stock in payment of a 3970 charge from its accountant for

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