What perpetual growth rate is expected on this stock

Assignment Help Financial Management

Reference no: EM131049628

Assume that a company’s stock currently sells for $40 per share and the required (and expected) return on the stock is 10%. Also assume that this return is evenly split between capital gains yield and dividend yield. If the company expects a constant growth rate, what is the next expected annual dividend per share?

A firm's stock is currently selling for $20 per share and the next dividend is expected to be $1 per share. Assume that the required rate of return on this stock is 10%. What perpetual growth rate is expected on this stock?

Reference no: EM131049628

Questions Cloud

Lowest-highest futures prices that will not allow arbitrage : Assume that the FTSE100 stock index level is 5000, and there is a futures contract on the index maturing one year from today. Assume that you can borrow any amount at an annual rate of 5.5% and lend any amount of money at an annual rate of 4.5%. What..

Share dividend to its common stockholders : Ms. Manners Catering (MMC) has paid a constant rate of $3.14 per share dividend to its common stockholders for the past 9 years. MMC expects to continue this policy for the next two years, and then begin to increase the dividend at a constant rate eq..

The financial pages of the local newspaper : You have just noticed in the financial pages of the local newspaper that you can buy a bond ($1000 par). IF the coupon rate is 3.9% with annual interest payments, and there are 13 years to maturity, what should the purchase be valued at if your requi..

Simple rate of return on bond : You have just purchased a 10 year, $1000 par value bond. the coupon rate on this bond is 5.5 percent annually with interest being paid each 6 months. If you expect to earn a 10.2 simple rate of return on this bond, how much do you pay for it?

What perpetual growth rate is expected on this stock : Assume that a company’s stock currently sells for $40 per share and the required (and expected) return on the stock is 10%. Also assume that this return is evenly split between capital gains yield and dividend yield. A firm's stock is currently selli..

What is the expected return on the market-beta of this stock : A stock has an expected return of 10%, its beta is .9, and the risk-free rate is 5%. What is the expected return on the market? A stock has an expected return of 12%, the risk-free rate is 3%, and the market risk premium is 6%. What is the beta of th..

Interest is paid semi-annually-bond yield-to-maturity : A bond is selling at $900 (below its par value of $1000). The bond matures in 10 years and has pays offers a 5% coupon rate. Interest is paid semi-annually. What is the bond’s yield-to-maturity? A bond has face value of $1000 and a coupon rate of 8%...

Stock has returns of three percent : A stock has returns of 3 percent, 18 percent, -24 percent, and 17 percent for the past 4 years. Based on this information, what is the 95 percent probability range for any one given year?

Financial statements that have varying capital structures : Find two different financial statements that have varying capital structures. Write a paragraph about each that explains the debt-equity relationship and that computes the percent of debt and the percent of equity represented. Also note whether the p..

User Account

All Pages