Question: If a stock is expected to pay a dividend of $4 for the current year, what is the approximate present value of this stock, at

If a stock is expected to pay a dividend of $4 for the current year, what is the approximate present value of this stock, at a discounted rate of 5% and a dividend growth rate of 3%.

Step by Step Solution

★★★★★

3.35 Rating (173 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Computation of the Stock Price Given information Dividend pe... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

68-B-C-F-S-V (244).xlsx

300 KBs Excel File

Students Have Also Explored These Related Corporate Finance Questions!

1. Calculate the expected value of each of the following gambles. a. win $100 with probability 1/6; win $10 with probability 1/3; lose $5 with probability. b. win $1,000,000 with probability .0001;...

A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 12.5%, and the expected constant growth rate is g = 8.5%. What is the current stock price?...

A stock is expected to pay a dividend of $1 per share in two months and in five months. The stock price is $50, and the risk-free rate of interest is 8% per annum with continuous compounding for all...

1. You purchased 300 shares of a stock on margin at $45 per share. Assume the initial margin is 60% and the maintenance margin is 40%. At what stock price will you get a margin call?(Assume the stock...

1. You purchased 300 shares of a stock on margin at $45 per share. Assume the initial margin is 60% and the maintenance margin is 40%. At what stock price will you get a margin call? (Assume the...

1. Market Value Added is the difference between the capital contributed to the company by bondholders and shareholders and the final market value of the product. The formula used to find market value...

Market Value Added is the difference between the capital contributed to the company by bondholders and shareholders and the final market value of the product. The formula used to find market value...

If a stock is expected to pay a dividend of $40 for the current year, what is the approximate present value of this stock, given at discount rate of 5% and a dividend growth rate of 3%?

SOLVE THE PROBLEM BELOW:SHOW YOUR WORK If a stock is expected to pay a dividend of $50 for the current year, what is the approximate present value of this stock, given at discount rate of 7% and a...

If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 8%?

Consider the inverting operational amplifier in Figure AP2.9. Find the transfer function V0(s)/V1(s), Show that the transfer function can be expressed as where the gains KP, KI, and KD are functions...

Use the following diagrams to answer a and b. a. Show the effect of an increase in demand on the perfectly competitive firms price, marginal revenue, output, and profits in the short run. b. Show the...

The City of Valley Ridge has an internal service fund that purchased a building for $ 4 0 0 , 0 0 0 , of which $ 7 5 , 0 0 0 is considered the cost of the land. The city should Blank _ _ _ _ _ _ ....

(gcd(m, n))2 Let m, n E N. Prove that gcd (m2, n2) =

Solve the differential equation. f ''(x) = 4, f '(2) = 10, f(2) = 17 f(x)=___________

The front 1.20 m of a 1,350-kg car is designed as a "crumple zone" that collapses to absorb the shock of a collision. (a) If a car traveling 27.0 m/s stops uniformly in 1.20 m, how long does the...

6. The potential energy is given by the formula 0 if x 0 u(x) = 2x if 0x 1 2 if x 1 { 2x 2 At the initial time to a body of mass 1g leaves the origin and moves rightwards with a velocity vo...

1) The weight in fig 6.23 is falling. How does the magnitude of the tension on the string compare to magnitude of the force of gravity of the weight? 2) A ball is struck with an initial velocity of...

Consider the two versions of the dual problem for the radiation therapy example that are given in Tables 6.15 and 6.16. Review in Sec. 6.4 the general discussion of why these two versions are...

Define cost-volume-profit analysis?

Describe the assumptions underlying CVP analysis.

Distinguish between operating income and net income.

Using which experimental design type can a researcher establish change? (Hint: time is essence for a change to be established) 1. After-only design II. One group before-after design III. Two group...

Blue Angel, Inc., a private firm in the holiday gift industry, is considering a new project. The company currently has a target debt-equity ratio of .45, but the industry target debt-equity ratio...

Hello, please advise, thank you. 11-1, My answer was 111,096.05 and 111.10 but wrong. 11-2, I put 316,000 and 316.5 but wrong. Q11-1 Q 11-2 North Star had the following data (thousands of dollars):...