Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

A company currently pays a dividend of $2 per share (Do=$2). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% therafter. The company's stock has a beta of 1.2, the risk free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price?

The answer in the book says it is $50.50, but I'm coming up w/a slightly different number. Can you describe how to get to the correct answer?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M943787

Have any Question? 


Related Questions in Basic Finance

1 discuss the situations in which a researcher may choose

1. Discuss the situations in which a researcher may choose to use a naturalistic research approach and the questions such an approach can and cannot answer. 2. Consider the consequences of a researcher's decisions about ...

Part a answer each of the following questions be sure to

Part A: Answer each of the following questions. Be sure to show all of your work and calculations. 1. Woody's Cafe's real estate tax of $1,110.85 was due on November 1, 2013. Due to financial problems, Woody was unable t ...

1 researchers who use group designs replicate their

1. Researchers who use group designs replicate their findings by repeating the same (or a similar) experiment on other samples of participants. How do single-case researchers replicate their findings? 2. What is the rati ...

Explain how an organization determines whether a hedge is

Explain how an organization determines whether a hedge is sufficiently effective to justify hedge accounting? Describe the primary differences between accounting for fair value hedges and accounting for cash flow hedges? ...

Taxable income- nick is married and has three children in

Taxable Income:- Nick is married and has three children in college. His wife is a homemaker. Nick has an adjusted gross income of $37,400. If Nick's standard deduction is $11,900, his itemized deductions are $12,200, and ...

1 statistical measure of stand - alone risk calculate the

1. Statistical Measure of Stand - Alone Risk: Calculate the expected returns for the individual stocks in Juan's portfolio as well as the expected rate of return of the entire portfolio over the three possible market con ...

You have been asked to evaluate the effects of a new

You have been asked to evaluate the effects of a new educational video that was developed to reduce racial prejudice among adolescents. You plan to administer a pretest measure of racial attitudes to 60 adolescent partic ...

1 based on the following information construct a

1. Based on the following information, construct a traditional financial institution balance sheet AND a balance sheet including off-balance sheet items. Market value of assets = 200                                      ...

The potential revenues of all projects are in fact

The potential revenues of all projects are in fact uncertain. The company determines that the revenue for project 1 is following a uniform distribution ranging from $1,200,000 to $2,000,000. The revenue for project 2 is ...

An electronic retail chain wishes to minimize its ordering

An electronic retail chain wishes to minimize its ordering costs for a particularly popular model of laptop computer. This retail has a line credit to finance its inventory and the current holding rate is 5.5%. The chain ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro