Dividends are expected to grow at rate

Assignment Help Financial Management
Reference no: EM131059125

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 12 percent, and the company just paid a dividend of $3.25, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131059125

Questions Cloud

What is the NAV of the fund and Expected NAV : A mutual fund has 400 shares of General Electric, currently trading at $14, and 400 shares of Microsoft, Inc., currently trading at $29. The fund has 1,000 shares outstanding. What is the NAV of the fund? If investors expect the price of General Elec..
Expected portfolio returns : Expected Portfolio Returns. If a portfolio has a positive investment in every asset, can the expected return on the portfolio be greater than that on every asset in the portfolio? Can it be less than that on every asset in the portfolio?
What is the value of the stock today : Nonconstant growth Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.  If the required return on Microtech is 15%, what is the value of the stock today?
What does the market believe will be the stock price : Constant growth You are considering an investment in Keller Corp's stock, which is expected to pay a dividend of $2.50 a share at the end of the year (D1 = $2.50) has a beta of 0.9. The risk-free rate is 2.9%, and the market risk premium is 4.0%. Ass..
Dividends are expected to grow at rate : Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 12 percent, and the company just paid a di..
Diversifiable and nondiversifiable risks : Diversifiable and nondiversifiable risks. In broad terms, why is some risk diversifiable? Why are some risks nondiversifiable? Does it follow that an investor can control the level of unsystematic risk in a portfolio, but not the level of systematic ..
Marginal cost of capital schedule : Steve and Styles (S&S) are constructing its Marginal Cost of Capital (MCC) schedule. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. What is S&S cost of preferred stock?
Free-cash-flows-based valuation approaches : Explain the theory behind the free cash ?ows valuation approaches. Why are free cash ?ows value-relevant to common equity shareholders when they are not cash ?ows to those shareholders but rather are cash ?ows into the ?rm?
If its yield to maturity remains unchanged : A bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8.70% with interest paid annually. If the current market price is $870, what will be the approximate capital gain of this bond over the next year if its yield to m..

Reviews

Write a Review

Financial Management Questions & Answers

  Discuss the following topic should trade restrictions be

discuss the following topic should trade restrictions be used to influence human rights issues? for many years human

  What is the firms weighted average cost of capital

A firm's preferred capital mix is 80% equity and 20% debt. Their treasurer has estimated the required return to investors to be 12%; they have debt with a rate of 8%; and a tax rate of 40%. What is the firm's weighted average cost of capital?

  A project will produce an operating cash flow

A project will produce an operating cash flow of $31,200 a year for 7 years. The initial fixed asset investment in the project will be $204,900. The net after tax salvage value is estimated at $62,000 and will be received during the last year of the ..

  Number of tables and chairs to produce to maximize profit

A small furniture manufacturer produces tables and chairs. Each product must go through three stages of the manufacturing process: assembly, finishing, and inspection. Each table requires 3 hours of assembly, 2 hours of finishing, and 1.5 hour of ins..

  Comparing two different capital structures-break-even EBIT

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 755,000 shares of stock outstanding. Under Plan II, there would be 505,000 shares of stock outstan..

  About the periodic inventory system

Determine the missing amounts assuming that this company uses the periodic inventory system. 2014 2015 2016 Sales $290,000 $ ? $410,000 Sales returns & allowances 11,000 13,000 ? Net sales ? 347,000 ? Beginning inventory 20,000 32,000 ? Ending invent..

  Increase the cost of equity for a firm with a beta

Which of the following will increase the cost of equity for a firm with a beta of 1.1?

  Yield to maturity and call with semiannual payments

Thatcher Corporation's bonds will mature in 18 years. The bonds have a face value of $1,000 and an 8.5% coupon rate, paid semiannually. The price of the bonds is $950. The bonds are callable in 5 years at a call price of $1,050.

  Determine the present value

Determine the present value of $5,000 is received in the future at the end of each indicated time. In each of the following situations 5% for 10 years 7% for 7 years 9% for 4 years

  Prepare a statement of stockholders equity for the year

Prepare a summarized income statement for the year 2014. HIGHLIGHT CONSTRUCTION COMPANY Income Statement For the Year Ended December 31, 2014 Total sales revenue $128,400 Total sales revenue 80,200 Inventory of merchandise 2. Prepare a statement of s..

  What percent of face value will you receive

A bond matures in 25 years, but is callable in 11 years at 123. The call premium decreases by 2 percent of par per year. If the bond is called in 16 years, what percent of face value will you receive? (

  What is the current book value of the old machine

A five year old machine cost $15,000 when new and is being depreciated on a a straight line basis to a zero salvage value in 5 more years ( 10 years total life.) the operating expenses for this machine are $2500 as of the end of each 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