### What is the best estimate of the stock current market value

Assignment Help Financial Management
##### Reference no: EM132028652

1. ABC Company's last dividend was \$1.4. The dividend growth rate is expected to be constant at 29% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (rs) is 13%. What is its current stock price (i.e. solve for Po)?

2. ABC just paid a dividend of D0 = \$2.1. Analysts expect the company's dividend to grow by 30% this year, by 20% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 17%. What is the best estimate of the stock’s current market value?

#### Questions Cloud

 Cost of common stock from reinvested earnings : Estimate the cost of common stock from reinvested earnings: the CAPM, the DCF method, and the bond-yield + risk premium approach. What was the market risk premium during these ten years : What was the market risk premium during these ten years? Calculate the optimal number of orders per year : Calculate the economic order quantity. Calculate the optimal number of orders per year. What is the stock expected price three years from today : The required rate of return on the stock is 19.5%. What is the stock's expected price 3 years from today (i.e. solve for P3)? What is the best estimate of the stock current market value : The required return on this stock is 17%. What is the best estimate of the stock’s current market value? Performance evaluation of portfolio is difficult : Performance evaluation of a portfolio is difficult. What are some advantages and disadvantages that investment managers should be aware of? Broad market-focused differentiation : You may need to grab your STADM book for this one. Narrow market, focused differentiation. Broad market, focused differentiation The percentage increase in the nav of george mutual fund : What is the percentage increase in the NAV of George's mutual fund? What is the required rate of return on this stock : What is the required rate of return on this stock? That is, solve for r.

### Write a Review

#### Compute the realized rate of retune for an investor

Compute the realized rate of retune for an investor who purchased the bonds when they were issued and held them until they were called.

#### Opinion on creating shareholders value with divestures

What is your opinion on creating shareholders value with divestures (Explain)? What deals contribute to the success of Mergers & Acquisitions explain?

#### Positive correlation between prices and trading volume

In housing markets, there is a positive correlation between prices and trading volume.

#### Various capital budgeting-investment analysis tools

What are the strengths and weaknesses of the various capital budgeting/investment analysis tools?

#### Interest expense and the corporate tax rate

Trevi Corporation recently reported an EBITDA of \$32,000 and \$9,500 of net income. The company has \$6,600 interest expense, and the corporate tax rate is 35 percent. What was the company’s depreciation and amortization expense?

#### Minimum-maximum credit-refundable or non-refundable credits

Discuss the underlying rationale for one of the following tax credit items. Explain any restriction on claiming the credits such as AGI limitations, minimum and maximum credit, refundable or non-refundable credits etc. Please do not duplicate your pe..

#### 1 financial ratio analysis is used by managers equity

1. financial ratio analysis is used by managers equity investors long-term creditors and short-term creditors. what is

#### What is net profitability in dollars

The total income generated from their investments was \$220,000 after all expenses were paid. What is the net profitability in dollars?

#### An interest-earning account

You currently have \$67,000 in an interest-earning account. From this account, you wish to make 20 year-end payments of \$5,000 each. What annual rate of return must you make on this account to meet your objective?

#### Total amount spent on vehicle under each assumption

Use your financial calculator to compute the monthly payments for a vehicle that coststs \$15,000. Compare total amount spent on vehicle under each assumption.

#### Assuming the firm goes through with the recapitalization

Calculate the return on equity (ROE) under each of the three economic scenarios assuming the firm goes through with the recapitalization.

#### Compute the present value of smyth industries profits

Ignoring antitrust concerns, compute the present value of Smyth Industries' profits, if it could have remained a monopoly when the interest rate was 0.06.