If dividends are expected to be constant-intrinsic value

Assignment Help Financial Management

Reference no: EM13911172

Pro Build Inc. has had a net income of $2 million in its most recent year. Net income is expected to grow by 3% per year. The firm always pays out 30% of net income as dividends and has 500,000 shares of common stock outstanding. The current cost of equity is 12%.

1. What is the current stock price?

ABC Corp. has just paid an annual dividend of $0.27. ABC has a required return of 12%.

1. If dividends are expected to be constant, what is the intrinsic value (fair price) of ABC stock?

Reference no: EM13911172

Questions Cloud

Compute the cost of preferred stock : Medco Corporation can sell preferred stock for $90 with an estimated flotation cost of $2. It is anticipated the preferred stock will pay $8 per share in divide. a. Compute the cost of preferred stock for Medco Corp

What challenges lay ahead for altitude online : What challenges lay ahead for Altitude Online as it rolls out its new ERP system? How might the ERP affect Altitude Online future growth and success?

Calculate the coupon rate of bonds : Quick Loans has outstanding bonds that have 16.5 years to maturity. The YTM is 7.2 percent and the current price is $935. These bonds make semiannual payments. Calculate the coupon rate of these bonds.

Decided to sell a new line of golf clubs : McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $790 per set and have a variable cost of $390 per set. The company has spent $149,000 for a marketing study that determined the company will sell 53,000 sets per year ..

If dividends are expected to be constant-intrinsic value : Pro Build Inc. has had a net income of $2 million in its most recent year. Net income is expected to grow by 3% per year. The firm always pays out 30% of net income as dividends and has 500,000 shares of common stock outstanding. The current cost of ..

How important is an erp to the functioning of a business : Judging from the ERP features, how important is an ERP to the functioning of a business? Explain. What consideration do you think led Altitude Online to decide to host the ERP on its own servers rather than using SaaS? What are the benefits and dra..

A company has two products: standard and deluxe : A company has two products: standard and deluxe. The company expects to produce 34,300 standard units and 69,550 deluxe units.

What issues and concerns might a manufacturer : What issues and concerns might a manufacturer have in sharing product data?

Compute the total amount of overhead cost allocated : The following is taken from Antuan Co.'s internal records of its factory with two operating departments.

User Account

All Pages