Investors required rate of return

Assignment Help Financial Management
Reference no: EM131313130

You expect Budweiser will pay dividends of 2.00 in one year, 2.50 in two years, and 3.00 in three years. From that point onwards, dividends will grow at 7% per year. Investors' required rate of return is 10%. According to the Dividend Discount Model, what should be Budweiser's stock price?

Reference no: EM131313130

Questions Cloud

Suppose you are evaluating two mutually exclusive projects : If the cost of capital on both projects is 5%, which project, if any, would you choose? Why?- If the cost of capital on both projects is 8%, which project, if any, would you choose? Why?
Companies loans to finance investments : Which of the following provides savers with a secure place to invest funds and offer both individuals and companies loans to finance investments?
Physical presence in the state : The internet brings up new issues with jurisdiction. If a company ships products to a State but does not have a physical presence in the State can they still be summoned to appear in Court in the State where the products are shipped? Why or why ..
Calculate the modularity of the network : In a survey of couples in the US city of San Francisco, Catania et al. [65] recorded, among other things, the ethnicity of their interviewees and calculated the fraction of couples whose members were from each possible pairing of ethnic groups.
Investors required rate of return : You expect Budweiser will pay dividends of 2.00 in one year, 2.50 in two years, and 3.00 in three years. From that point onwards, dividends will grow at 7% per year. Investors' required rate of return is 10%. According to the Dividend Discount Model,..
Discuss how strong leaders apply power to motivate : Discuss how strong leaders apply power, influence, advocacy, and authenticity to motivate those they lead.
Percent of the profits at the time : Buhman argued that there was no partnership agreement supported by consideration and that McGaughy was a contract laborer receiving 40 percent of the profits at the time he was terminated. Was McGaughy a partner of The Smoke Ring? Why or why not? ..
Prepare a marketing research used to select target market : Prepare a presentation on Marketing research used to select target market. "They are very eager to see what we have been working on during the past few weeks," she says excitedly.
Differentiate consultation from supervision : Coaching and mentoring should be a core competency of nurses prepared at the graduate level. Do you agree or disagree with this statement? Defend your response.Based on your graduate specialization, identify one coaching activity that you can do ..

Reviews

Write a Review

Financial Management Questions & Answers

  How much of your earnings will be interest on interest

You deposit $1,800 in your bank account. If the bank pays 5% simple interest, how much will you accumulate in your account after 8 years? b. What if the bank pays compound interest (annually)? How much of your earnings will be interest on interest?

  Cash flow statements from balance sheets and net income

Discuss the following: the difference of cash flow statements from balance sheets and net income, the importance of cash flows to a business, and the failure of a business even when the net income statement is positive.

  The beta be for the other stock in your portfolio

You own a portfolio equally invested in a riskfree asset and two stocks. If one of the stocks has a beta of 1.5 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

  Proceeds to buy back shares of company common stock

Ridgefield Enterprises has total assets of $300 million and EBIT of $45 million. The company currently has no debt in its capital structure. The company is contemplating a recapitalization where it will issue debt at 10 percent and use the proceeds t..

  Issued a bond with ten years to maturity

Jiminy’s Cricket Farm issued a bond with 10 years to maturity and a semiannual coupon rate of 8 percent 3 years ago. The bond currently sells for 96 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt? Wha..

  Calculate the arithmetic average returns-the variances

Returns Year X Y 1 10 % 15 % 2 24 25 3 10 14 4 – 17 – 22 5 10 16 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y.

  What type of option is embedded in the new security

What type of option is embedded in the new security? What are the major components in valuing the new security? How do you price the newly issued preferred stock? How would you evaluate the tradeoff between accepting the new preferred stock and keepi..

  Banks savings and loan offering introductory rate

You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 3.2 percent per year, compounded monthly for the first six months, increasing thereafter to 18.1 percent compounded monthly. Required: Assuming y..

  Time for a lump sum to double

How long will it take $200 to double if it is deposited and earns the following rates? Round your answers to the closest year. [Notes: (1) This problem cannot be solved exactly with some financial calculators. If you are using a financial calculator,..

  Dividend check you will get next time dividend is paid

Fuller Preferred has a nominal rate of 3% with a par value of $3.75. You just bought 3 round lots at a quote of 12.65. What is the dividend check you will get the next time a dividend is paid?

  What is the dividend growth rate

Xytex Products just paid a dividend of $1.92 per share, and the stock currently sells for $38. If the discount rate is 15 percent, what is the dividend growth rate?

  Continuously compounded lump sum investment

You have your choice of two investment accounts. Investment A is a 13-year annuity that features end-of-month $1,100 payments and has an interest rate of 6.7 percent compounded monthly. Investment B is a 6.2 percent continuously compounded lump sum i..

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