Growth rate is expected to equal the industry average

Assignment Help Financial Management
Reference no: EM131057186

Pettway Corporation’s next annual dividend is expected to be $4. The growth rate in dividends over the following three years is forecasted at 15%. After that, Pettway’s growth rate is expected to equal the industry average of 5%. If the required return is 18%, what is the current value of the stock?

Reference no: EM131057186

Questions Cloud

What will be the total deduction for social security : Lily is paid $2,240 weekly. So far this year she has earned $91,840. What will be the total deduction for social security and Medicare taxes on her next paycheck? Social security tax is 6.2% of wages up to $113,700. Medicare tax is 1.45% of all wages
Company pays current dividend of per share of common stock : A company pays a current dividend of $1.20 per share of common stock. The annual dividend will increase by 3%, 4% and 5%, respectively, over the next three years, and by 6% per year thereafter. The appropriate discount rate is 12%. What is the price ..
Determinations of the density of an alloy : Five successive determinations of the density of an alloy gave the following results:10.29 g/mL, 9.95 g/mL, 10.06 g/mL, 9.89 g/mL, 10.18 g/mLWhat value should be reported for the density of this alloy?
Explain three approaches that network administrators can use : Explain three approaches that network administrators can use in order to ensure a fault tolerant network design without a single point of failure.
Growth rate is expected to equal the industry average : Pettway Corporation’s next annual dividend is expected to be $4. The growth rate in dividends over the following three years is forecasted at 15%. After that, Pettway’s growth rate is expected to equal the industry average of 5%. If the required retu..
Providing details of changes during the financial year : ACC00713 S1 2016 Report. List the components of Shareholder's Fund/Equity presented in the annual report of the chosen company, providing details of changes during the financial year
Current year dividend for share of common stock : The current year’s dividend for a share of common stock is $2 and the current price of the stock is $30. Dividends are expected to grow at 5%, forever. What is the rate of return for this stock?
Provide your opinion on the gui versus the command line : provide your opinion on The GUI versus the Command Line. Use the Internet to research the long standing debate of the "GUI versus the Command Line". Based on your research and what you have learned so far in this class.
Liquid with the higher boiling point : The normal boiling point and vapor pressure at 25 °C aremeasured for liquids in two flasks. Flask A contains purewater and flask B contains a 1.0 M aqueous NaClsolution. Which flask contains the liquid with the higher boiling point?

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the future value in five years

Assume you received $8,000 today. Calculate the future value in five years of the $8,000 if your investments pay a. 6 percent compounded annually b. 8 percent compounded annually c. 10 percent compounded annually d. 10 percent compounded semi annuall..

  Find the amount of the investment

Suppose that an investment earning 6% interest compounded continuously has a balance of $4500 after 4 years. Find the amount of the investment as follows: Write an equation by using the given information in the compound continuous interest formula.

  Changes tend to affect aggregate payout ratios

How would each of the following changes tend to affect aggregate payout ratios (that is, the average for all corporations), other things held constant? An increase in the personal income tax rate. A liberalization of depreciation for federal income t..

  Publishes creative crosswords-variable operating cost

JWG Company publishes Creative Crosswords. Last year, the book of puzzles sold for $10, with a variable operating cost of $8 per book and a fixed operating cost of $40,000. How many books must JWG sell this year to achieve the breakeven point for the..

  Utilization of cash flow analysis is setting the bid price

Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus, the bid price represents a financial break-even level for the project..

  The yield to maturity on one-year zero-coupon bonds

The yield to maturity on one-year zero-coupon bonds is 7.8%. The yield to maturity on two-year zero-coupon bonds is 8.8%. What is the forward rate of interest for the second year?  If you believe in the liquidity preference theory, is your best guess..

  What is the minimum nominal rate of return

What is the minimum nominal rate of return you should accept, if you require a 5% real rate of return and the rate of inflation is expected to average 4.60% during the investment period?

  Calculates its discretionary financing needed

A company calculates its discretionary financing needed and determines this amount of capital cannot be raised at a reasonable cost. Which of the following would reduce the amount of discretionary financing needed?

  An investor in treasury securities expects inflation

An investor in Treasury securities expects inflation to be 2.35% in Year 1, 3.15% in Year 2, and 4.25% each year thereafter. Assume that the real risk-free rate is 1.75%, and that this rate will remain constant. Three-year Treasury securities yield 6..

  Calculate total cost of ordering and carrying inventories

Start with the partial model Ch 28 P3 Build a Model.Xls from the textbook's website. The following inventory data have been established for the Adler Corporation: (1). Orders must be placed of 100 Units. (2). Annual Sales are 338,000 Units. Calculate..

  Break-even analysis-what is the firms gain or loss

Break-Even Analysis- The Weaver Watch Company sells watches for $25, fixed costs are $140,000 and variables costs are $15 per watch. What is the firm`s gain or loss at sales of 8,000 watches? At 18,000 watches? What is the break-even point? Illustrat..

  Dividends are expected to grow at a constant rate

Sun Investment Inc. current stock price is $450 and its last dividend was $8.00. In view of Sun’s strong financial position and its consequent low risk, its required rate of return is 6%. If dividends are expected to grow at a constant rate, g, in th..

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