Required rate of return on the stock

Assignment Help Financial Management
Reference no: EM13945124

GoFit Training Inc just paid an annual year-end dividend of $1.60 per share. It plans to increase the dividend by 7% next year, and increase it by the same percentage for the future. If the required rate of return on the stock is 8%, what is the value of GoFit's stock (to the penny)? Formula: Next Div/ (Req Rate - Growth Rate)

Reference no: EM13945124

Questions Cloud

Prepaid insurance : What is prepaid insurance what do you have to do after journalizing
What will the aftertax salvage value be : Farris Industrial purchased a machine five years ago at a cost of $164,900. The machine is being depreciated using the straight-line method over eight years. The tax rate is 35 percent and the discount rate is 14 percent. If the machine is sold today..
The weight at birth of males has a mean value : The weight at birth of males has a mean value of 3.53 kg with a standard deviation of 0.58. What birth weight has a z-score of 0.81? Round to the nearest hundredth as needed.
Retirement account at interest compounded annually : You deposit $2,500 today in a retirement account at 6% interest compounded annually. How much more money will you have if you leave it in a for 35 years rather than 25 years?
Required rate of return on the stock : GoFit Training Inc just paid an annual year-end dividend of $1.60 per share. It plans to increase the dividend by 7% next year, and increase it by the same percentage for the future. If the required rate of return on the stock is 8%, what is the valu..
Director of marketing for a company manufacturing laundry : The director of marketing for a company manufacturing laundry detergent conducts an experiment to compare satisfaction with the laundry detergent product based on level of temperature used for the wash. A random sample of 500 individuals
Terms of the present value of those cash flows : You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?
Discount rate should the firm apply to project cash flows : Deep Mines has 14 million shares of common stock outstanding with a beta of 1.15 and a market price of $42 a share. There are 900,000 shares of 9 percent preferred stock outstanding valued at $80 a share. What discount rate should the firm apply to a..
The company increases advertising expenditures : The sales manager believes the company could increase sales by 3,000 units if advertising expenditures are increased by $30,000. Determine the effect on income if the company increases advertising expenditures.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the companys weighted average cost of capital

Dobson Dairies has a capital structure, which consists of 60 percent long-term debt and 40 percent common stock. Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget. What is the company’s weighted av..

  Capital budgeting case

Your company is thinking about acquiring another corporation. You have two choices—the cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an option. The following are your critical data:

  Amount of annual net cash flow generated by the business

Tawanna is considering starting a small business. She plans to purchase equipment costing $149,000. Rent on the building used by the business will be $26,000 per year while other operating costs will total $32,400 per year. what will be the amount of..

  What is the projects operation cash flow for first year

The financial staff od Carin Communications has identified the fallowing information for the first year of the roll-out of its new proposed services: The company faces a 40% tax rate. What is the project’s operation cash flow for the first year (t=1)..

  Difference between operating and transaction exposure

What is the difference between operating and transaction exposure? In your opinion, which one of the two is more important to manage for the competitiveness of a multinational enterprise?

  Semi-annual coupon bond with a par value

A 7-year, 11.00% semi-annual coupon bond with a par value of $1000 may be called in 5 years at a call price of $1,155.00. The bond sells for $970.50. (Assume that the bond has just been issued.). What is its yield to maturity?

  Futures contracts are two types of derivative investments

Options and futures contracts are two types of derivative investments. Which of the two would you rather invest in and why? Make sure to discuss the major differences between the two as part of your answer.

  A project will produce an operating cash flow

A project will produce an operating cash flow of $31,200 a year for 7 years. The initial fixed asset investment in the project will be $204,900. The net after tax salvage value is estimated at $62,000 and will be received during the last year of the ..

  Whereas us and uk have a large and active takeover market

Why are only suf?ciently large blockholders expected to monitor management? Whereas the United States and the United Kingdom have a large and active takeover market.

  Research the variables that impact the pricing of options

Research the variables that impact the pricing of options. Focus your energy on comparing the attributes of the two widely accepted models used for option pricing: Black-Scholes and Binomial Models.

  Part of the integrated world capital market

The U.S. and Great Britain are part of the integrated world capital market. If the expected real rate of return declines significantly in the U.S., explain what will be the impact on interest rates in Great Britain and the U.S.

  What is the current bond price-bonds make annual payments

Cee Co. issued 20-year, $1,000 bonds at a coupon rate of 7 percent. The bonds make annual payments. If the YTM on these bonds is 4 percent, what is the current bond price?

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