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The Duo Growth Company just paid a dividend of $4.4 per share. The dividend is expected to grow at a rate of 20% per year for the next 3 years and then to level off to 10% per year forever. You think the appropriate market capitalization rate is 13% per year.
a. What is your estimate of the intrinsic value of a share of the stock? Round your answer to 2 decimal places.
b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? Round your answer to 1 decimal place.
c. What do you expect its price to be 1 year from now? What is the implied capital gain? (Round your answers to 2 decimal places.
The firm's overall cost of capital that is a blend of the costs of the different sources of capital is known as the firm's
Find the hedge ratio for a call option on £10,000 with a strike price of €15,000. The current exchange rate is €1.50/£1.00 and in the next period the exchange rate can increase to €2.40/£ or decrease to €0.9375/£. The current interest rates are i€ = ..
Calculating Rate of Return. Assume that at the beginning of the year, you purchase an investment for $8,000 that pays $100 annual income. Also assume the investment’s value has decreased to $7,400 by the end of the year.
Assume that the economy can experience high growth, normal growth, slow down or severe recession. Under these conditions you expect the following stock market returns for the coming year: compute the standard deviation of the return as a percentage o..
A private school is considering the purchase of six school buses to transport students to and from school events. The initial cost of the buses is $600,000. The life of each bus is estimated to be five years, after which time the vehicles would have ..
The real risk-free rate is expected to remain at 3 percent. Inflation is expected to be 3 percent this year, and 4 percent next year. The maturity risk premium is estimated to be equal to 0.1%(t - 1), where t = the maturity of a bond (in years).
Assume a country has an official inflation rate of 130% per month. What was the annual inflation rate?
San Mateo Healthcare had an equity balance of $1.38 million at the beginning of the year. At the end of the year, its equity balance was $1.98 million. Assume that San Mateo is a not-for-profit organization. What was its net income for the period?
List the Four Noble Truths. Explain how they illustrate the practical nature of Buddhist teaching?
Absalom Motors's 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 25 years are callable 6 years from now at a price of $800. The bonds sell at a price of $1,150, and the yield curve is flat. Assuming that interest rates in t..
You are paying an effective annual rate of 15.33 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on this account?
Present Value of an Annuity What is the present value of a $2,100 annuity payment over 7 years if interest rates are 11 percent?
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