What is the current price of van burens stock

Assignment Help Financial Management
Reference no: EM13938334

Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 4% and the market risk premium is 8%.

Van Buren currently expects to pay a year-end dividend of $2.85 a share (D1 = $2.85). Van Buren's dividend is expected to grow at a constant rate of 4% a year, and its beta is 0.6. What is the current price of Van Buren's stock? Round your answer to the nearest cent.

Reference no: EM13938334

Questions Cloud

Organizational change: a conceptual approach : Read the article titled "Multilevel Readiness to Organizational Change: A Conceptual Approach". Give your opinion on which two (2) means of diagnosing change are most relevant to today's organizations. What is meant by the term "readiness"?
Evaluating the introduction of a new product line : K is evaluating the introduction of a new product line at her plumbing and Supply Company. She anticipates a selling price of $500 per unit, with sales volume of 2,000 units in Year 1, 3,000 units in Year 2 and 1,500 units in Year 3.
What is expected return on portfolio-invested in two assets : A stock has a beta of .7 and an expected return of 17 percent. A risk-free asset currently earns 4.8 percent. What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has a beta of 1.27, ..
Prepare a scatter graph of customer service cost : Prepare a scatter graph of customer service cost (vertical axis) and sales (horizontal axis).
What is the current price of van burens stock : Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 4% and the market risk premium is 8%. Van Buren currently expects to pay a year-end dividend of $2.85 a share (D1 = $2.85). Van Buren..
What is the definition of a city : What is the definition of a "city". Please provide a 300 word answer.
Fair return on the well : You own an oil well from which you will receive 10 annual payments of $30,000. The first payment will be made 2 years from now(end of second year). If you think a fair return on the well is 5,5%, how much should you ask if you decide to sell now?
What are the monthly mortgage payments : A 20-year mortgage has an annual interest rate of 5.05 percent and a loan amount of $155,000. What are the monthly mortgage payments?
The idea is to design a presentation for an organization : For the PowerPoint Presentation, the idea is to design a presentation for an organization that you work for, have worked for, or would like to work for in the future. Create the presentation using PowerPoint. This presentation will be used to teach n..

Reviews

Write a Review

Financial Management Questions & Answers

  Expected rate of return on the market portfolio

The expected rate of return on the market portfolio is 9.75% and the risk–free rate of return is 1.75%. The standard deviation of the market portfolio is 19%. representative investor’s average degree of risk aversion = 2.22

  What is the operating breakeven point

The Niendorf Corporation produces teakettles, which it sells for $15 each. Fixed costs are $700,000 for up to 400,000 units of output. Variable costs are $10 per kettle. What is the operating breakeven point? Illustrate by means of a chart.

  What will be the balance on the account after eight deposits

You deposit today $600 dollars in an account that pays 1.4 percent per year. For the next few years you will keep making deposits 5.1 percent larger than the previous one. What will be the balance on the account after 8 deposits?

  Capm and required return-capm and portfolio return

HR Industries (HRI) has a beta of 1.2, while LR Industries' (LRI) beta is 0.7. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. The expected rate of inflation built into rRF falls by 1.5 percentage points, the rea..

  What is the present value of the dividend stream

Chapman Inc.'s Mexican subsidiary, V. Gomez Corporation, is expected to pay to Chapman 50 pesos in dividends in 1 year after all foreign and U.S. taxes have been subtracted. The exchange rate in 1 year is expected to be 0.10 dollars per peso. What is..

  Benefit ratio-value of projected benefit divided by cost

Cost-benefit analysis presents data as a ratio to determine financial impact on company profitability. The formula is: cost-benefit ratio = value of projected benefits divided by cost. What is the cost-benefit ratio of this training? What is the retu..

  Describe how present and future values concepts apply

Describe how present and future values concepts apply to your income and expenses and ultimately your personal budget, income statement, and balance sheet

  Value of the shareholders equity account for this firm

KCCO, Inc., has current assets of $5,200, net fixed assets of $25,200, current liabilities of $4,250, and long-term debt of $9,400. What is the value of the shareholders’ equity account for this firm? How much is net working capital?

  What is the common stock for year 2

If the preferred stock is cumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years. What is the Common Stock for year 2?

  Texas constitution requires that public servants

The US Constitution, in Article 6, prohibits any religious test from being required to serve in any public office. The Texas Constitution requires that public servants acknowledge the existence of a Supreme Being.

  Calculate value of share of stock-discounted dividend model

Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: the investors required rate of return 14%. the expected level of earning at the end of the year (E1) is $5. the firm follows a policy o..

  What is the value of the firms common stock

Can you explain the constant growth model and try to solve the following problem: A firm has experienced a constant annual rate of dividend growth of 9 percent on its common stock and expects the dividend per share in the coming year to be $2.70. The..

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