Value aol-time warner share by discounting future, Ask an Expert

Finance

1) On July 26, 2002, AOL-Time Warner stock closed at= $10.90, had next-year consensus earnings estimate of= $0.99 per share, forward P/E= 11, and 18.5% annual nominal earnings growth expected for the next five years. Suppose that AOL-Time Warner’s annual growth was expected to decrease to 10% during following five years and then settle down to average long-term growth of 4%. AOL-Time Warner’s 5-year growth consensus was about 1.5% higher than long-term nominal growth of earnings forecasted at that time for S&P 500 as a whole. Additionally, suppose that after ten years AOL-Time Warner was expected to start a 51% dividend payout. Value AOL-Time Warner share by discounting future dividends. Suppose a cost of equity of 12%. Interpret your results.

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M914867

Have any Question?Write your Review or question?

Related Questions in Basic Finance

You would like to retire in 39 years the expected rate of

You would like to retire in 39 years. The expected rate of inflation is 01.00% per year. You currently have a standard of living that requires $7,442 of monthly expenses. Assuming you want to maintain the same standard o ...

What methods will you use to effectively manage

What methods will you use to effectively manage expectations for a project. There are many different types of stakeholders on a project. Do their expectations differ? How can you work to ensure that the project does not ...

Imagine there is a 100000 t-bill that matures in 130 days

Imagine there is a $100,000 T-bill that matures in 130 days. The T-bill has a discount yield of 2.102%. Ignoring fees or commissions, how much in dollars would I pay for this T-bill?

For an 18-year fixed payment loan for 200000 with an annual

For an? 18-year fixed payment loan for? $200,000 with an annual interest rate of? 5.20% and making QUARTERLY? payments, what percent of your first payment would apply to the? principal?

You are the project manager assigned to build and design a

You are the project manager assigned to build and design a parking garage. What might be an example of a lead you encounter when scheduling work activities?

How people in midlife or late adulthood can enhance optimal

How people in midlife or late adulthood can enhance optimal aging?

Define and fully explain marketing research and the

Define and fully explain marketing research and the marketing concept and describe the relationship between marketing research and the marketing concept.

Stock x has a beta coefficient of 20 and stock y has a beta

Stock X has a beta coefficient of 2.0 and stock Y has a beta coefficient of 1.5. The expected rate of return on an average stock is 11% and the risk-free rate is 5%. By how much does the required rate of return on the ri ...

Donald is a college student who has 4125 in a savings that

Donald is a college student who has $4125 in a savings that he earned from his summer job. He plans to leave the $4125 in a certificate of deposit(CD) with Goldman Sachs bank earning 2% for three years, but his banker ha ...

Specifically share one clearly defined financial goal along

Specifically, share one clearly defined financial goal along with several specific objectives to help you achieve it. Remember effective goals and objectives are SMART What are some resources you may need to help you ach ...

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

Recent Questions

Ask Basic Finance Expert