Anderson Corporation recently paid a $3 annual dividend. The company is projecting that its dividends will grow by 15 percent this year, 12 percent in year two, 9% in three, and then at 7 percent annually thereafter. Based on this information, how much should this company’s common stock sell for today if the required return is 14%?

 MPQ Corporation just generated FCF of $2,000,000 in the most recently completed year. FCF is expected to grow by 9% this year, 7% in year two and 6% in year three. Beginning in year four, FCF will grow at a constant and sustainable rate of 5%. The Company has $7,000,000 of debt, $1,000,000 of preferred stock and 2,000,000 shares of common stock outstanding. With a required rate of return of 17%, what is a share of MPQ’s common stock worth?

Answer rating: 100% (QA)

To calculate the present value of future cash flows for both Anderson Corporation and MPQ Corporatio... View the full answer