Ask Question, Ask an Expert


Ask Basic Finance Expert

problem1: Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25 percent for the next four years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was 1.25 dollars, its beta is 1.20, the market risk premium is 5.50 percent, and the risk-free rate is 3.00 percent. find out the current price of the common stock?

[A] $26.77

[A] $30.21

[C] $31.42

[D] $27.89

[E] $29.05

problem2: Savickas Petroleum’s stock has a required return of 12 percent, and the stock sells for 40 dollar per share. The firm just paid a dividend of 1.00 dollar, and the dividend is expected to grow by 30% per year for the next 4 years, so D4 = $1.00(1.30)4 = $2.8561. After t = 4, the dividend is expected to grow at a constant rate of X percent per year forever. What is the stock’s expected constant growth rate after t = 4, i.e., what is X?

[A] 5.72%

[B] 6.02%

[C] 6.34%

[D] 5.17%

[E] 5.44%

problem3: The Ramirez Company's last dividend was 1.75 dollar. Its dividend growth rate is expected to be constant at 25% for two years, after which dividends are expected to grow at a rate of 6 percent forever. Its required return [rs] is 12 percent. Determine the current stock price?

[A] $43.71

[B] $44.80

[C] $45.92

[D] $41.58

[E] $42.64

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916710

Have any Question? 

Related Questions in Basic Finance

What is the relationship between net exports and aggregate

What is the relationship between net exports and aggregate demand, and between net exports and capital flows? If net exports increase, ceteris paribus, what happens to real GDP? If the domestic price level increases, cet ...

Part a bogart ltd has determined the number of widgets it

Part A Bogart Ltd has determined the number of widgets it will need during the next five years as follows: 2011 50000 2012 50000 2013 52000 2014 55000 2015 55000 The equipment used to manufacture the widgets must be repl ...

This is a public finance and budgeting course must be apa

THIS IS A PUBLIC FINANCE AND BUDGETING COURSE / MUST BE APA FORMAT AND "A" WORK Compose an essay of no less than 500 words discussing the topics covered in this unit. Your essay should include the following: - Describe a ...

Finance assignmentrequirements-callimbah inc is a

Finance Assignment REQUIREMENTS- Callimbah Inc. is a successful company that is involved in the  business consultancy sector. Callimbah Inc.  provides both accounting and business advisory services to small and medium si ...

Discussioncourse wrap-up please respond to the

Discussion "Course Wrap-Up" Please respond to the following: Imagine you have completed your bachelor's degree at University and you are searching for a job in finance, accounting or business. Using various employment we ...

Baker industries net income is 25000 its interest expense

Baker Industries' net income is $25,000, its interest expense is $6,000, and its tax rate is 45%. Its notes payable equals $25,000, long-term debt equals $75,000, and common equity equals $260,000. The firm finances with ...

Finance reporton the 4th of october 2016 the reserve bank

Finance Report On the 4th of October 2016, the Reserve Bank of Australia (RBA) board will meet to discuss domestic and global economic conditions and release its monetary policy statement, having decided upon the appropr ...

In excercises 17-36 assume that a randomly selected subject

In excercises 17-36, assume that a randomly selected subject is given a bone density test. Those test scores are normally distributed with a mean of 0 and a standard deviation of 1. In each case, draw a graph and find th ...

A suppose you are hiring a worker for your firm you

a. Suppose you are hiring a worker for your firm. You advertise a position for $50,000, but an applicant offers to work for $40,000. Should you jump at this offer? b. Suppose you have $1000 to lend and offer it for 10-pe ...

The hartnett corporation manufactures baseball bats with

The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez's autograph stamped on them. Each bat sells for $35 and has a variable cost of $22. There are $97,500 in fixed costs involved in the production pro ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate