What is the most that jelena should pay for made-it stock

Reference no: EM13296250

Jen wants to assess the attractiveness of buying 'Made-It's' stock, currently trading at $22.50 per share. Made-It executives claim that the company will have a constant growth rate of 9%, and that the dividend, paid at the end of the year, will be two dollars per share.

Jen has done some work with the Capital Asset Pricing Model.

She has determined that the Made-It's Beta is 2; that the risk-free rate is 1%, and that the S&P 500 is projected to grow at 10%.

Using CAPM, what is the required return on equity? and What is the expected total return on Made-It's stock?

!!! My question is Should Jen buy the stock? If not, what is the most that Jelena should pay for Made-It stock?

Reference no: EM13296250

Questions Cloud

Discuss the positives and negatives of capitalizing leases : Discuss the positives and negatives of CAPITALIZING leases and the related leased assets.

What is the angular speed of the ferris wheel : A boy is on a Ferris wheel, which takes him in a vertical circle of radius 7.6 m once every 15.0 s. What is the angular speed of the Ferris wheel

What is the stock expected capital gains yield : If D1 = $1.50, g (which is constant) = 6.5%, and P0 = $56, what is the stock's expected capital gains yield for the coming year?

Explain what is the concentration of hcl if 25.9 ml : The titration reaction is CO3^(2-) + 2H+ yields H2O + CO2 What is the concentration of HCl if 25.9 mL of HCl was needed to to react with 0.311 g of Na2CO3 to reach the end point

What is the most that jelena should pay for made-it stock : She has determined that the Made-It's Beta is 2; that the risk-free rate is 1%, and that the S&P 500 is projected to grow at 10%.

Explain what is the h3o+ in a buffer that consists : What is the [H3O+] in a buffer that consists of 0.30 M HCOOH and 0.20 M HCOONa? Ka=1.7x10^-4

What is the final temperature of the statue : The specific heat of granite is 0.80 kJ/kg x C. If 106 MJ of heat are added to a 100-kg granite statue of James Prescott Joule that is originally at 18 degrees C

What unique problems do couples with a wide age gap face : What unique problems do couples with a wide age gap face as they plan for retirement What are some solutions to the situation What should be the investment strategy

Compute the molarity of h3o+ added as hcl : You add 1.0mL of 1.00 M HCl to the buffer. Calculate the molarity of H3O+ added as HCl, and the final molarities of acetic acid and acetate ion at equilibrium. what is the new value of pH

User Account

All Pages