What is the value of the stock today

Assignment Help Finance Basics
Reference no: EM13268412

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 6% per year. If the required return on the stock is 17%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to the nearest cent. Do not round your intermediate computations.

Reference no: EM13268412

Questions Cloud

What is the rate of heat loss by radiation from the stove : A black wood stove with surface area 4.6 m^2 is made from cast iron 4.0 mm thick. What is the rate of heat loss by radiation from the stove
Describe the four ways your estate can be transferred : Define estate and describe the four ways your estate can be transferred. Give an example of each method.
Compute the molarity of the saturated naoh solution : At a certain temperature, a saturated solution contains 537 g of NaOH(s) per liter of solution. Calculate the molarity of this saturated NaOH(aq) solution.
Calculate the next value of x and function f : During the k^th sampling interval of a CVSD modulation scheme, the current value of input x(k) is 1000, the previous value of approximating staircase function x f(k-1) is 990, and the current value of ä(k-1) is 30.
What is the value of the stock today : what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to the nearest cent. Do not round your intermediate computations.
Determine the amount of heat that entered the cylinder : The amass of the aluminum cylinder is (207.8±0.1)g. Once the cylinder is turned through the numbers of turns as described in Problem 1, Determine the amount of heat that entered the cylinder
Explain what is the concentration in meq per liter : A solution contains 0.625 grams of CA 2+ in enough water to make 1880ml solution, what is the concentration in mEq per liter
Find the total energy of the atom : A hydrogen atom is in its n = 8 excited state. Determine, according to quantum mechanics, find the total energy (in eV) of the atom
Explain a specific brand of gourmet chocolate candy contains : A specific brand of gourmet chocolate candy contains 7.00 g of dietary fat in each 22.7 g piece. How many kilograms of dietary fat are in a box containing 3.00 lb of candy? Express your answer numerically in kilograms.

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain the risk involved in this strategy

Explain the risk involved in this strategy. Do you think the risk here is greater or less than it would be if the bond proceeds were used to finance U.S. operations? Why?

  Determine fair value of bond

A 1,000 face value bond has remaining maturity of ten years and a required return of 9 percent. The bond's coupon rate is 7.4%. Determine the fair value of this bond?

  Draw the tree indicating price of an american call option

Draw the tree indicating the price of an American call option at each node. Indicate the nodes where it is optimal to excercise the option early.

  Computation the investment for each year

Computation the investment for each year and wants to invest equally amounts at the end of each year for the next 6 years to accumulate

  What is the purpose of computing a moving-average line

What is the purpose of computing a moving-average line for a stock? Describe a bullish pattern using a 50-day moving-average line and the stock volume of trading. Discuss why this pattern is considered bullish.

  Gauge of your ability to apply your tools

This question should be a good gauge of your ability to apply your tools and analytic skills acquired thus far on the topic of valuation. **Important to note the firm goes into financial distress in this case and defaults on its payment.

  What is the cross-rate in terms of yen per pound

Suppose the Japanese Yen exchange rate is 106 yen/dollar, and the British pound exchange rate is $1.51 dollars/pound. What is the cross-rate in terms of yen per pound?

  Will this factor change the firms decision

The after-tax cash inflows associated with this purchase are projected to amount to $250,000 per year for 15 years. Will this factor change the firm's decision about how to fund the initial investment.

  Budgeting for the future years

Describe how revenue sources are planned and budgeted in nonprofits. What are at least 4 of key revenue assumptions that should be made in for-profit entity?

  What is the probability that in the next sample

At any given moment, the pipeline managers estimate that 1.5% of the seams will need repair. What is the probability that in the next sample of 25 seams, 2 or fewer of the seams will need repair?

  Organizational theory and design-after mergers and growth

Organizations merge and grow bigger and differentiate, which can cause problems in functional structure.

  Detemine the price for each mri scan

The Sans Roentgen Outpatient MRI Center has asked you to detemine the price to be charged for each MRI scan for the first year of operations. Below is the relevant budget information:

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