Natural cosmetics is fairly priced in the marketplace

Assignment Help Financial Management
Reference no: EM131886395

Sime Natural Cosmetics Ltd. has a dividend yield of 2 percent based on the current dividend and a mature phase dividend growth rate of 5 percent a year. The current dividend growth rate is 10 percent a year, but the growth rate is expected to decline linearly to its mature phase value during the next six years.

A. If Sime Natural Cosmetics is fairly priced in the marketplace, what is the expected rate of return on its shares?

B. If Sime were in its mature growth phase right now, would its expected return be higher or lower, holding all other facts constant?

Reference no: EM131886395

Questions Cloud

Under-overvalued stock and portfolio beta : Compute the return the firm should earn given its level of risk. What is the beta of your portfolio?
What is your best estimate of the future annual returns : what is your best estimate of the future annual returns over 6 years? 10 years? 19 years?
What is hastings required return : Hastings Entertainment has a beta of 0.53. If the market return is expected to be 14.70 percent. what is Hastings’ required return?
Discounted payback period for these cash flows : Calculating Discounted Payback. What is the discounted payback period for these cash flows if the initial cost is $7,500?
Natural cosmetics is fairly priced in the marketplace : If Sime Natural Cosmetics is fairly priced in the marketplace, what is the expected rate of return on its shares?
Explain what pipeline risk is in mortgage banking : Explain what “pipeline risk” is in mortgage banking and why it is such a dominating risk to mortgage banking.
Using two-stage dividend discount model : Estimate the value of ANN using a two-stage dividend discount model.
How important is growth to this valuation model : Contrast your two answers and comment on your findings. How important is growth to this valuation model?
Determine the constant dividend growth rate : Determine the constant dividend growth rate that would be required to justify the market price of € 24.

Reviews

Write a Review

Financial Management Questions & Answers

  Call option value using the two-sate stock price method

calculate your estimate of the call option's value using the two-sate stock price method.

  Net present value-pretax cost of debt-cost of equity

Granite Graphics has a pretax cost of debt of 7.68 percent and a cost of equity of 15.2 percent. The firm uses the subjective approach to determine project discount rates. The project has an initial cost of $4.3 million and produces cash inflows of $..

  The standard deviation of that starting salary

You have chosen biology as your college major because you would like to be a medical doctor. However, you find that the probability of being accepted into medical school is about 10 percent. If you are accepted into medical school, then your starting..

  The additional profit contribution from additional sales

Initiating a cash discount; a company is considering offering a 1% discount for payment within 15 days, the current average collection period is 60 days. Sales are 40,000 units and the selling price is $42 per unit. The additional profit contribution..

  Analysis of firm projected cash flow budget

Explain how financial ratio analysis of a firm’s projected cash flow budget could be efficiently used by its managers for financial planning. (b) Explain why creating budgets and other financial planning is an important part of business planning.

  What is the marginal tax rate of this investor

A municipal, non-taxable, bond has a yield to maturity of 5.6 percent. A corporate, taxable, bond with comparable risk has a yield to maturity of 7.8 percent. An investor is indifferent between these two bonds. What is the marginal tax rate of this i..

  Non participating whole life insurance policy

Beth purchased a $50,000 non participating whole life insurance policy. The annual premium was $1,278. The cash value of the policy after 10 years will be $13,740. The future value of $1 deposited at the start of the year for 10 years, assuming 5 per..

  Straight line depreciation in this particular situation

Why might this choice be better than straight line depreciation in this particular situation?

  The coefficient variation of the return

Champion Breweries must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firms analysis. For Each asset computer: a) Expected rate of return? b) The standard deviation of the expected r..

  Interior fire-control plan and perimeter fire-control plan

prepare a net-present-value analysis of the chief ranger's decision between the interior fire-control plan and the perimeter fire-control plan.

  What is the new inflow or outflow as measure in us dollars

What is the new inflow or outflow as measure in U.S. dollars?

  Rate of return and make no additional contributions

Assuming you earn a 10 percent rate of return and make no additional contributions, what will your account be worth when you retire in 45 years?

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