What if you use geometric average growth rate

Assignment Help Financial Management

Reference no: EM131905440

Suppose Stark Ltd. just issued a dividend of $1.92 per share on its common stock. The company paid dividends of $1.50, $1.65, $1.72, and $1.83 per share in the last four years. If the stock currently sells for $40, what is your best estimate of the company’s cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity % What if you use the geometric average growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %

Reference no: EM131905440

Questions Cloud

Determined without knowing the impact on profit margin : It cannot be determined without knowing the impact on the profit margin.

Under proposed capital structure of firm : What will Allison’s cash flow be under the proposed capital structure of the firm? Assume she keeps all 100 of her shares.

What is the approximate beta of limited stock : What is the capitalization rate foe X Limited. What is the approximate Beta of X Ltd Stock.

International society of six sigma professionals : Is the International Society of Six Sigma Professionals (ISSSP) relevant in today’s market-place? If so, Why? If not, Why not?

What if you use geometric average growth rate : Suppose Stark Ltd. just issued a dividend of $1.92 per share on its common stock. What if you use the geometric average growth rate?

Traditional or returning-result of being in classification : Are you a “traditional” or “returning” student? List an important advantage you have as a result of being in this classification.

What is the maximum cost the company : What is the maximum cost the company would be willing to pay for this project?

Calculate the wacc change if the new tax rate was adopted : By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?

What is the aftertax salvage value of the equipment : What is the aftertax salvage value of the equipment? What is the annual operating cash flow?

User Account

All Pages