Estimated value per share of your firm stock

Assignment Help Financial Management

Reference no: EM131541697

Nonconstant Growth Stock Valuation Assume that the average firm in your company's industry is expected to grow at a constant rate of 7% and that its dividend yield is 6%. Your company is about as risky as the average firm in the industry and just paid a dividend (D0) of $2.25. You expect that the growth rate of dividends will be 50% during the first year (g0,1 = 50%) and 25% during the second year (g1,2 = 25%). After Year 2, dividend growth will be constant at 7%. What is the required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM131541697

Questions Cloud

Develop a training and organizational development : Develop a training and Organizational Development (OD) proposal and presentation to senior management targeted at improving diversity training

What ethical issues are involved in stem cell research : While stem cell research and human cloning are often interrelated, there are differences in these two approaches. Stem cell research has many medical.

How is quality and growth connected : How is quality and growth connected? It should always go hand in hand in health care. Your quality will affect your growth.

What is loan to value relationship : If a company goes bankrupt where do convertible bonds stand in terms of seniority? What is loan to value relationship?

Estimated value per share of your firm stock : What is the required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock?

Analyse the business strategy of a company : Study the business strategies of a famous business person (EXCEPT Samsung, Netflix, Apple, Blackberry, Google)

Determine the standard deviation of expected return : Determine the standard deviation of the expected return.

Provide students opportunity to apply research on motivation : Provide students an opportunity to apply research on motivation and satisfaction to the analysis of their individual behavior and environment.

What type of change does red carpet need : Now that you have gained an understanding of Red Carpet, Leroy has asked you to join in on a preliminary meeting with the VP of HR.

User Account

All Pages