What should be the price of the company stock today

Reference no: EM131938397

Question: Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.35 per share at the end of 2013. The dividend is expected to grow at 12% per year for 3 years, after which time it is expected to grow at a constant rate of 5% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2013)? Round your answer to the nearest cent. Do not round intermediate calculations.

Reference no: EM131938397

Questions Cloud

What would be the maintenance margin : Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 50%. What would be the maintenance margin if a margin call is made.

Can the company succeed in practicing those values : While reading about the term "walk the talk" I remember a book that I have read it before for Mustafa Mahmoud.

What is the effective annual interest rate on the loan : What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places).

In which renewable energy sources should siemens invest : Identify the Strengths, Weaknesses and Current Market Status for each type of renewable alternate energies.

What should be the price of the company stock today : Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.35 per share at the end of 2013. The dividend is expected to grow at 12%.

What are the risk premiums for each factor : Assume that stock returns can be explained by a two-factor model. Company-specific risks for all stocks are independent. The table shows the information.

Will you limit or block internet access to your employees : How would you as an employee respond if your employer blocked or limited internet access at your facility?

Would she be indifferent between plans a and b : If the agent will use the service for daytime calls, over what range of call minutes will each plan be optimal?

Is there a need for facebook to deliver a message : Does Facebook need to establish a communications department or an executive communication position?

User Account

All Pages