If market conditions remain unchanged what new growth rate

Assignment Help Finance Basics
Reference no: EM13479432

XYZ stock is currently paying a dividend of $2.00 per share (D0 = $2) and is in equilibrium. The company has a growth rate of 5% and beta equal to 1.5. The required rate of return on the market is 15%, and the risk-free rate is 7%. XYZ is considering a change in policy that will increase its beta coefficient to 1.75. If market conditions remain unchanged, what new growth rate will cause the common stock price of XYZ to remain unchanged?

Reference no: EM13479432

Questions Cloud

I want the essay to be about solar energy and the role of : i want the essay to be about solar energy and the role of science and technology with respect to it. also the impact
The firm has 294 million shares of common stock : you are considering buying common stock in grow on inc. you have calculated that the firms free cash flow was 7.60
Wheeler has a beta of 16 the return on the market is : wheeler inc. is presently in a stage of abnormally high growth because of the excess demand for widgets. the company
You are in command of a group of first-responders who have : you are in command of a group of first-responders who have been activated in response to a disaster event.what
If market conditions remain unchanged what new growth rate : xyz stock is currently paying a dividend of 2.00 per share d0 2 and is in equilibrium. the company has a growth rate
Given the following information calculate the expected : given the following information calculate the expected capital gains yield for bimlo bottle caps beta 0.6 km 15 rf
This section describes the potential risk of discomfort and : consider a possible social science research project you might like to conduct. describe the project and develop a plan
The expected return on the market is 14 and the yield on us : dexter inc. has just paid a dividend of 2.00. its stock is now selling for 48 per share. the firm is half as volatile
Next years dividend is expected to be 260 if investors : ibm is currently selling at 65 per share. next years dividend is expected to be 2.60. if investors on this

Reviews

Write a Review

Finance Basics Questions & Answers

  Show personal financial plan influence your credit score

How can having a personal financial plan influence your credit score? Tell us about any negative or positive experiences you have had in regard to your credit and what you did or could have done to improve your credit rating.

  Why do some companies pay common stock cash dividends

Google does not currently pay any common stock cash dividends. Why do some companies pay common stock cash dividends whereas other companies do not?

  Topic of scarcity

Discuss the topic of scarcity using Opportunity costs, Trade-offs and Factors of production.

  Why did the price of the bond change

A $1,000 bond has a 7.5 percent coupon and matures after 10 years. If current interest rates are 10 percent, what should be the price of the bond?

  Description of present value of growth opportunities

Next year's earnings are estimated to be $6.00. The company plans to reinvest 33% of its earnings at 12%. If the cost of equity is 8%, what is the present value of growth opportunities?

  What is evanec cost of new common stock

The Evanec Company's next expected dividend, D1, is $3.18; its growth rate is 6%, and its common stock now sells for $36.00. New stock (external equity) can be sold to net $32.40 per share.

  Evaluate the annual depreciation allowances

Find what initial cash outlay is required for the new machine? Round your answer to the nearest dollar and evaluate the annual depreciation allowances for both machines and compute the change in the annual depreciation expense

  What would the firms total market value be

The CFO believes that a move from zero debt to 55.0% debt would cause the cost of equity to increase from 10.0% to 13.0%, and the interest rate on the new debt would be 8.0%. What would the firm's total market value be if it makes this change?

  What will be the firm quick ratio

How much can a company's short-term debt(notes payable) increase without pushing its current ratio below 2.0? What will be the firm's quick ratio after Nelson has raise the maximum amount of short-term funds?

  Investment management assignment

Prepare a report recommending the appropriate investment of AUD$3 million for a five year investment period for a particular investment client.

  Bond - precentage change

Consider an American bond with an effective duration (which is pretty much the same as modified duration, but more precise) of 6.76 years having a yield to maturity of 7% and interest rates are expected to rise by 50 basis points.

  What is avicorp pre-tax cost of debt

Avicorp has a $14.2 million debt outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 94% of par value.

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