What is the value per share of your firms stock

Assignment Help Financial Management

Reference no: EM131177469

Assume that the average firm in your company's industry is expected to grow at a constant rate of 7% and that its dividend yield is 6%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50% [D1 = D0(1 + g) = D0(1.50)] this year and 30% the following year, after which growth should return to the 7% industry average. If the last dividend paid (D0) was $1.75, what is the value per share of your firm's stock? Round your answer to the nearest cent. Do not round your intermediate computations.

Reference no: EM131177469

Questions Cloud

What problems might occur with full implementation of rfid : What problems might occur with the full implementation of RFID technology in retail industries? Specifically consider the amount of data that might be collected.

In the accumulation phase of the investor life cycle : A group of securities with similar characteristics is called a(n). In the accumulation phase of the investor life cycle.

Identify a modern day religious or political center : Identify a modern day religious or political center that these call to mind. Compare Angkor in southeast Asia with the city of Benin in West Africa, and discuss differences, similarities, and religious ideals in each place.

What is the arbitrage profit and what is strategy to earn it : European-style options on foreign currencies trade at the Philadelphia Exchange. A call option on sterling with an exercise price of 0.925 £/$ and a time to expiration of 3 months has a price of 0.0125 £/$. what is the arbitrage profit and what is th..

What is the value per share of your firms stock : Assume that the average firm in your company's industry is expected to grow at a constant rate of 7% and that its dividend yield is 6%. Your company is about as risky as the average firm in the industry, what is the value per share of your firm's sto..

Equilibrium with required return equal to expected return : A stock is trading at $60 per share. The stock is expected to have a year-end dividend of $3 per share (D1 = $3), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 16% (assume the market is in ..

Portfolios performance against certain index : Your portfolio consists of Microsoft and Google. On September 15, you fully invested you $1,000 on these two stocks with 50% of your money going into Microsoft (purchase price=$25 per share) and Google was purchased at $500 per share. On November 8, ..

How does attribution theory apply to reducing stigma : What role does a sociocultural model of psychopathology have in the context of the study? Explain. How does attribution theory apply to reducing stigma and increasing employment?

How much should jane deposit each month into her account : Jane would like to save money for her son’s college education by making monthly deposits into an account that earns 2.9% annual interest compounded monthly. Jane’s son will be 18 in 16 years and she would like to have $45, 000 for his education when ..

User Account

All Pages