What is intrinsic value of the stock today

Assignment Help Financial Management
Reference no: EM131055734

A stock is expected to pay a dividend of $1.00 next year and $1.50 in 2 years, after that the dividend is expected to grow at a constant rate of 4% per year forever. The stock s required rate of return is 11%. What is intrinsic value of the stock today?

Reference no: EM131055734

Questions Cloud

Arithmetic-geometric average time-weighted rates of return : Orange Computer, Inc.’s stock prices at the end of the last four years were $25, $27.50, $22.50 and $28.75. Each year they paid a dividend of $1 at the end of each year. What are your arithmetic and geometric average time-weighted rates of return? Wh..
Identify what the key ratios are and apply ratio analysis : FINA6017 Financial Management. The analysis of the case study must: Analyse the financial statements of the business; Identify what the key ratios are and apply ratio analysis
What was the form of your childhood family : What is an example (or examples) of similarity or dissimilarity between your childhood family culture (or your current family culture) and the dominant culture-and in what ways did/do you deal with the resulting feelings of congruence/incongruence..
Company total assets turnover : Gardial & son has an ROA of 12%, a 5% profit Margin, and a ROE equal to 20%. What is the company's total assets turnover? What is the firm's equity multiplier?
What is intrinsic value of the stock today : A stock is expected to pay a dividend of $1.00 next year and $1.50 in 2 years, after that the dividend is expected to grow at a constant rate of 4% per year forever. The stock s required rate of return is 11%. What is intrinsic value of the stock tod..
What is effective annual rate on arrangement : A firm sells its $1,150,000 receivables to a factor for $1,138,500. The average collection period is 1 month. What is the effective annual rate on this arrangement?
The bond makes semi-annual payments : USF Inc. issued a 20 year bond at a coupon rate of 7.0 percent. The bond makes semi-annual payments and has a par value of $1000. If the YTM on this bond is 6.0 percent, what is the bond's current price?
Expected return circuit city stores : Expected Return Circuit City Stores (CC) recently paid a $.29 dividend. The dividend is expected to grow at a 24.30 percent rate. At the current stock price of $9.26, what is the return shareholders are expecting?
How the event had one of the biggest impacts on that aspect : In a substantial paragraph using facts and statistics to back you up for each event, explain how that event had one of the biggest impacts on that aspect of history.

Reviews

Write a Review

Financial Management Questions & Answers

  The fixed asset will be depreciated straight-line to zero

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.82 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..

  Retirement plan guarantees

A retirement plan guarantees that you pay to your estate a fixed amount per year for 20 years. at the time of retirement you will have 470,000$ to your credit in the plan. The plan anticipates earning 6% interest during the period of time you are rec..

  Compute the NPV statistic for Project

Compute the NPV statistic for Project Y if the appropriate cost of capital is 12 percent.

  What is the lowest amount that you should bid per restaurant

You are developing a proposal to open three new mexican restaurants around the Metro Detroit area over the next four years. The project requires a purchase of $800,000 of equipment with a four year useful life and a book value of zero at the end of t..

  Money can always function as a store of purchasing power

Which of the following statements is false? Money can always function as a store of purchasing power, even if its value is relatively unstable. The ease with which an asset can be exchanged for money or other assets is referred to as liquidity.

  The cost to your subsidiary of purchasing materials

Assume you have a subsidiary in Australia. The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed funds from local banks. Your subsidiary purchases all of its materials from Hong Kong. Explain wheth..

  What is payback period in whole number years for investment

You invest $25,000 now and receive $3,000 per year for 25 years starting at the end of the first year. What is the payback period in whole number years for this investment? In other words, in what year do you break even on this investment? Use i = 8%..

  In an efficient market-the price of a security

In an efficient market, the price of a security will:

  Determine the competiveness of the market

Determine the competiveness of the market and include a ratio analysis of NOPAT and economic profit to determine the credibility of future forecasting

  Depreciated straight-line to zero over their lives

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs. System B costs $342,000, has a six-year life..

  Compute incremental cash flows of investment for each year

The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 31 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are ..

  What is the percentage change in the price of bonds

Bond J has a coupon rate of 4.8 percent. Bond S has a coupon rate of 14.8 percent. Both bonds have eleven years to maturity, make semiannual payments, and have a YTM of 10.6 percent. Requirement 1: If interest rates suddenly rise by 2 percent, what 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