Nonconstant growth valuation

Assignment Help Finance Basics
Reference no: EM13153752

Nonconstant Growth Valuation

A company currently pays a dividend of $3.25 per share (D0 = $3.25). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 5% thereafter. The company's stock has a beta of 1, the risk-free rate is 8%, and the market risk premium is 3%. What is your estimate of the stock's current price? Round your answer to the nearest cent.

Reference no: EM13153752

Questions Cloud

Carrying value of clyde investment : For the year ended December 31, 2011, Blake reported income of $63,000 and paid cash dividends of $14,000 on its common stock. What is the proper carrying value of Clyde's investment in Blake at December 31, 2011?
How has walmart impacted vertical coordination : How has Walmart impacted vertical coordination? Your opinion does not need to be based upon the article and how has Walmart impacted performance of the US economy
Calculate the ph of the solution : A chemist dissolves 284 mg of pure potassium hydroxide in enough water to make up 140 mL of solution. Calculate the pH of the solution.
What in cells that lack camp phosphodiesterase : In cells that have a G α subunit that cannot hydrolyze GTP but can interact properly with G β and G γ.
Nonconstant growth valuation : Nonconstant Growth Valuation A company currently pays a dividend of $3.25 per share (D0 = $3.25). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 5% thereafter. The comp..
Terrible of war : What are your feelings about the war? The war is very horrible. I don’t understand why they are fighting each other. It can be destroyed everything. Also, after the war, people will have a hard time.
How much heat is in kilojoules was released : A student mixed 75.0 mL of water containing 0.75 mol HCl at 25 degrees C with 75.0 mL of water containing 0.75mo of NaOH at 25 degrees in a foam up calorimeter. The temperature of the resulting solution increased to 35 degrees C.
What proportion of their offspring will be carriers : A carrier is represented by Tt. The disease is caused by the genotype tt while normal individuals have the genotype TT.
Morgan was persuaded that group discussion : Morgan was persuaded that group discussion and group decision making could work at Hoffman Restaurant, where she was manager. Once back at the restaurant, she called together thirty servers and relayed this message.

Reviews

Write a Review

Finance Basics Questions & Answers

  Find number of chests produced

Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 20x7 are as follows: Finished goods inventory at the end of December is 4,000 units. Ending finished goods are equal to 40% of next month's sales.

  Level of operating efficiency

How can a government be tempted to take a profit cannot afford? What sounds better, $250,000 of increased services or $187,500 less in expenditures?

  Amortization expense for the patent

Lexicon Corporation purchased a patent for $600,000 on January 2, 2001, at which time the patent had an estimated useful life of ten years.

  Computation of interest expenses

Computation of interest expenses at required combined leverage and if the firm has no preferred stock and what are its annual interest charges

  Dividend policy and agency costs

Compare plain growth, pure proposition of sales, economies-of-scale, industry-based and disaggregated forecasts. Provide some examples from your work setting for some or all of these types of forecasts.

  Determine the effective quarterly rate

Determine the effective quarterly rate and the nominal annual rate, What is the spreadsheet function to find the nominal annual rate above

  Construct hospitals base case projected p&l statement

Corporation, a not-for-profit acute care facility has this cost structure for its inpatient services: The hospital expects to have a patient load of 15,000 inpatient days next year.

  Traditional and derivative instruments

What are the differences between traditional and derivative instruments?

  Monitoring the financial situation

What happen if financial projections based on incorrect data? For example, if your booked accounts receivable is significantly higher than actual accounts receivable & cash inflows, does your expense budgeting change?

  Determine the effective rate on bank loan

Bosworth Petroleum requires $500,000 to take a cash discount of 2/10 net 70. A banker will land money for sixty days at an interest cost of $8,100.

  Concept of time value of money

How would you describe the use of time value of money (TVM) in business? What considerations are made when calculating TVM?

  Find overall company net income

Jo's Coffee corporation have two stores in Arizona. Their corporate office is planning eliminating the one of their stores due to declining sales.

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