What is your estimate of the stocks current price

Assignment Help Financial Management
Reference no: EM131066266

A company currently pays a dividend of $3 per share (D0 = $3). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.25, the risk-free rate is 3.5%, and the market risk premium is 5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM131066266

Questions Cloud

Attract business or leisure travelers : Highlight characteristics near the location that may attract business or leisure travelers.
What is the expected number of parts retrieved : What is the expected number of parts retrieved until the first defective?
Why would companies undertake such given behavior : Read the article below. Why would companies undertake such behavior? Article- Bud's ‘America' Cans Mark Trump-Fueled Surge in USA Marketing.
What has sue failed to consider : what has Sue failed to consider?
What is your estimate of the stocks current price : A company currently pays a dividend of $3 per share (D0 = $3). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.25, the..
Explain the different types of costs : Explain the different types of costs (variable, fixed, sunk, opportunity, direct, indirect). Give 1-2 examples of each type of cost and explain how these costs will be applied during the manufacturing process.
What is the ocf at the base-case quantity sold : Consider a three-year project with the following information: initial fixed asset investment = $678,000; straight-line depreciation to zero over the four-year life; What is the OCF at the base-case quantity sold? How sensitive is OCF to changes in qu..
What does trade openness index measure : What does trade openness index measure? Calculate trade openness index for any TWO (2) of the chosen countries from the years 2008 to 2014 based on the data collected in part (a).
Develop a 90% confidence interval estimate of the population : Descriptive statistics (mean, median, range, and standard deviation) to summarize each of the three variables for the 50 Western Region shoes. Are there any outliers in the data set for any of the three variables? If there are any outliers in any ..

Reviews

Write a Review

Financial Management Questions & Answers

  Initiating client services

Assume that you are the owner of an import business that specializes in the sale of floor tiles from around the world. Your business has grown dramatically over the 2 years since its founding, and you are looking for a way to convert your accounts re..

  Company is expecting a growth rate

A company is expecting a growth rate of 14% for the next two years due to a new invention. Thereafter it should level to an 8% growth rate. The last dividend paid was $.65 per share. What price should the stock sell for if investors require 12% retur..

  What is the return shareholders are expecting

Expected Return Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of $44.12, what is the return shareholders are expecting?

  Filing and legal fees related to the stock issue

Wear Ever is expanding and needs $11 million to help fund this growth. The firm estimates it can sell new shares of stock for $40 a share. It also estimates it will cost an additional $300,000 for filing and legal fees related to the stock issue. The..

  Raising funds with preferred stock

Norman Entertainment Corporation recently sold an issue of preferred stock at $45 per share. The dividend is $7.55, and the issuance costs are $4 per share. What is the cost to Norman Entertainment of raising funds with preferred stock?

  Question 1a- wildcat company stock is trading for 80 per

question 1a- wildcat company stock is trading for 80 per share. the stock is expected to have a year end dividend of 4

  Describe the methodology for designing tests

Describe the methodology for designing tests using the audit risk model. What tests would you utilize to reduce risk in the sales and collection cycle?

  Application using the same cost of carry model

Suppose the spot price for Euro is $1.15, the futures price for delivery in 6 months is $1.1471286. Assume that the 6 month borrowing/lending rate in Euro is 0.75percent (annually, continuous compounding) and the corresponding rate in $ is 0.25percen..

  Salvage value-what is the net present value of the asset

Management is considering purchasing an asset for $50,000 that would have a useful life of 5 years and no salvage value. For tax purposes, the entire original cost of the asset would be depreciated over 5 years using the straight-line method. What is..

  Coefficient of variation measures the risk of investment

Stocks A, B, and C have expected returns of 14 percent, 14 percent, and 11 percent, respectively, while their standard deviations are 48 percent, 29 percent, and 29 percent, respectively. If you were considering the purchase of each of these stocks a..

  What can we do to build good credit scores

What can we do to build good credit scores? In the long term and in the very short term? What does not work? What happens when one can’t pay one’s debt? What are the basics of bankruptcy proceedings?

  How much will the investment be worth seven years from today

If you invest $ 1,000 today in a security paying 8 percent compounded quarterly, how much will the investment be worth seven years from today?

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