What should be the value of this stock

Assignment Help Financial Management
Reference no: EM13814575

The Joseph Company has a stock issue that pays a fixed dividend of $3.00 per share annually. Investors believe the nominal risk-free rate is 4 percent and that this stock should have a risk premium of 6 percent. What should be the value of this stock?

Please answer should be in excel format

Reference no: EM13814575

Questions Cloud

What would be the initial-operating and terminal cash flow : Barbarian Pizza is analyzing the prospect of purchasing an additional fire brick oven. The oven costs $200,000 and would be depreciated (straight-line to a salvage value of $120,000 in 10 years. What would be the initial, operating, and terminal cash..
Compute the weighted average cost of capital for a firm : Compute the weighted average cost of capital for a firm of your choosing (they must have bonds and common stock outstanding, preferred stock is optional). You should use current market information to determine the firm’s current cost of equity, cost ..
How about consumer protection legislation : Since the 2008-2011 financial crises, banks have become leery of lending to consumers. There has been much research completed on this subject and the blame has been a subject of much controversy. Fast-forward to 2013 and 2014. How about consumer prot..
What level of pretax cost savings : Your firm is contemplating the purchase of a new $600,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life.
What should be the value of this stock : The Joseph Company has a stock issue that pays a fixed dividend of $3.00 per share annually. Investors believe the nominal risk-free rate is 4 percent and that this stock should have a risk premium of 6 percent. What should be the value of this stock..
Determine the present value of the bonds cash flows : The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 16 percent. Assume interest payments are made semi annually. Determine the present value of the bond’s cash flows if the required rate of retu..
What is the present value or worth of this bond : Assume a $1,000 face value bond has a coupon rate of 8.5 percent paid semi annually and has an eight-year life. If investors are willing to accept a 10 percent rate of return on bonds of similar quality, what is the present value or worth of this bon..
Principal amount for treasury inflation-protected security : Compute the annual interest payments and principal amount for a Treasury Inflation-Protected Security with a par value of $1,000 and a 3-percent interest rate if inflation is 4 percent in year 1, 5 percent in year 2, and 6 percent in year 3.
Assuming the employee actual annual investment : You deposit 5% of your $40,000 annual income in a 401(K) plan at the end of each year. Your employer matches 2% of your earnings. You expect the plan to earn 10% and you are in the 25% tax bracket. Assuming the employee actual annual investment is $3..

Reviews

Write a Review

Financial Management Questions & Answers

  What do you think would about the futures price

What do you think would the futures price of 100 shares of your reference company to be delivered to you in one year be right now

  Growing rapidly and it currently retains all of its earnings

MCC is growing rapidly and it currently retains all of its earnings (no dividends). If is expected that MCC will begin paying a $1.00 dividend in year 3. The year 4 dividend will grow by 50% and the year 5 dividend will also increase by 50%. Thereaft..

  Cost of equity-calculate historical growth rate in earnings

Radon Homes's current EPS is $6.16. It was $3.73 5 years ago. The company pays out 55% of its earnings as dividends, and the stock sells for $36. Calculate the historical growth rate in earnings.

  Portfolio consisting of three stocks

You want to invest $20,000 in a portfolio consisting of three stocks - Stock M, Stock D, and Stock G. The percentage investment is as follows: Stock M 40%, Stock D 35% and Stock G 25%. Expected returns for the three investments Stock M, Stock D, and ..

  What is the bond price and what is the current yield

Energy Tech company issued an 8% (semi-annual payment) 20 year bond 5 years ago. If the yield of similar bond today is 6%, what is the bond price? What is the current yield?

  Explain reasoning to receive full credit

The time to complete a construction project is normally distributed with a mean of 40 weeks and a standard deviation of 5 weeks. For each item below, remember to show your calculations / explain reasoning to receive full credit.

  Proximity sensor attached to the tip of an endoscope

A proximity sensor attached to the tip of an endoscope could reduce risks during eye surgery by alerting the surgeon to the location of critical retinal tissue. A certain eye surgeon expects that by using this technology, he will avoid lawsuits of $0..

  What was the firms times interest earned ratio

Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's time’s interest earned (TIE) ratio?

  Compute the npv for project

Compute the NPV for Project

  Required return on the market portfolio

The risk-free rate is 3.6% and the required return on the market portfolio is 11.8%. A company that has just paid $1.80 per share in annual dividends has a beta of 0.9 and long-term growth rate of 5.2%. The dollar value of this stock is

  When a firm issues securities to the public

When a firm issues securities to the public for the very first time, these are generally under-priced. Explain why.

  Projects for both firms have an estimated rate of return

Northern Boat Mfg., Inc. has a weighted average cost of capital (WACC) of 16.8 percent, given the firm’s current boat-making operations. Home Builders, Inc. has a WACC of 14.4 percent, given that the firm builds new, single-family homes. Both firms a..

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