Human's Inc.'s last dividend (D0) was $1.12, and its earnings and dividends are expected to increase...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Human's Inc.'s last dividend (D0) was $1.12, and its earnings and dividends are expected to increase at a constant growth rate of 12%. Humana's market beta is 1.16. If the current risk-free rate is 5% and the required rate of return on the market portfolio is 12%, what is the company's current expected stock price? Hint-round up to the nearest whole dollar. Human's Inc.'s last dividend (D0) was $1.12, and its earnings and dividends are expected to increase at a constant growth rate of 12%. Humana's market beta is 1.16. If the current risk-free rate is 5% and the required rate of return on the market portfolio is 12%, what is the company's current expected stock price? Hint-round up to the nearest whole dollar.
Expert Answer:
Answer rating: 100% (QA)
SOLUTION We can use the constant growth dividend discount model to calculate the expected stock pric... View the full answer
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1305637108
6th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
Posted Date:
Students also viewed these finance questions
-
Instructions: Enter all answers directly in this worksheet. When finished select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to...
-
An investment will pay 24k in 6 years. If the interest rate is 10% with daily compounding what is the value of this contract today. If the quoted rate is 9.75% per year what is the present value of...
-
A firm has 200 shareholders, you among them. Each shareholder owns $20 worth of stock. In addition, Mr. Hostile owns 50 shares (for a firm total of 250 shares) and is trying to fire the management....
-
Cost information for Lake County Library is as follows. In addition to directly traceable costs, the library incurred $24,000 for a building lease. REQUIRED A. Allocate to departments any costs that...
-
The manufacturer's data sheet for a permanent-magnet dc motor indicates that it has a torque constant Km = 0.21 V/(rad/sec) and an armature resistance of 1.9. For a constant applied armature voltage...
-
Questions 1-2 refer to the following passage. The author of the passage is primarily concerned with a. Investigations into stereotyping and an awareness of stereotyping by individuals b. An...
-
Ronald Ondeyko, CPA, is considering the LaSalle Company's internal controls over investments, long-term debt, and capital stock. System documentation was accomplished with a questionnaire and a...
-
A review of the ledger of D. J. Moore Company at December 31, 2012, produces the following data pertaining to the preparation of annual adjusting entries.1. Salaries and Wages Payable $0. There are...
-
To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information...
-
The adjusted trial balance columns of the worksheet for Auburn Company are as follows. Instructions Complete the worksheet. Auburn Company Worksheet (partial) For the Month Ended April 30, 2020...
-
A company's financial reports are used for a variety of reasons, including determining how the company is doing in the financial market. You decide to evaluate the effects of economic and market...
-
Adjustments Debit Credit Prepaid Rent (A) 1,700 Office Supplies (B) 300 Accumulated Depreciation, Equipment (C) 375 Salaries Payable (D) 1,000 Rent Expense (A) 1,700 Office Supplies Expense (B) 300...
-
What is the self-employment tax rate for earnings above $160,200?
-
What's FIT of 4 employees that have a total gross earnings of $76486.12 , State income tax of $3747.82 and a contribution of 401(k) of $1529.72. Using the wage bracket method 2021.
-
1. What problems can arise when too much of an economy's wealth is in the hands of a few of the richest people? State as many negative effects as you can while explaining why each is a problem and...
-
1. Define mass media and explain why it is a socializing agent for children. 2. How is Obesity an issue for children's socialization? How do we address this issue as an early childhood educator? 3....
-
The table below describes two alternative investments: Fund 1 and Fund 2. The table also provides the annual fee a client pays for investing in that fund, the return that fund has generated since...
-
Refer to the information from Exercise 22-19. Use the information to determine the (1) Weighted average contribution margin , (2) Break-even point in units, and (3) Number of units of each product...
-
A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.) a. What is...
-
Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. a. What is the average amount of accounts payable net of discounts? (Assume the $3.65...
-
Refer to Problem 12-1. Return to the assumption that the company had $5 million in assets at the end of 2016, but now assume that the company pays no dividends. Under these assumptions, what would be...
-
Fill in the Blank. In the finite element method, \(a(n)\) ___________ solution is assumed within each element.
-
The stiffness matrix of a bar element is given by a. \(\frac{E A}{l}\left[\begin{array}{ll}1 & 1 \\ 1 & 1\end{array} ight]\) b. \(\frac{E A}{l}\left[\begin{array}{rr}1 & -1 \\ -1 & 1\end{array}...
-
What is the basis for the derivation of transformation matrices?
Study smarter with the SolutionInn App