Question: Nvidia (NVDA) has been profitable for many years. As such, NVDA plans to pays $1.2 in dividend next year. You think the company will

Nvidia (NVDA) has been profitable for many years. As such, NVDA plans to pays $1.2 in dividend next year. You think the company will be able to increase dividend by 25% for each of the next 5 years after the first dividend, then increase dividend at 15% for another 5 years. After year 12, the growth rate will be at constant rate of 10%. If your required return for NVDA is 12.8%, would you buy the stock at $300 a share?

Step by Step Solution

★★★★★

3.48 Rating (148 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To determine whether it would be advisable to buy the stock at 300 per share we need to calculate th... 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

Students Have Also Explored These Related Finance Questions!

Jim McNerney is racking up quite a record at 3M. Now, can he rev up its innovation machine? Jim McNerney was one of those boys: up early in the morning climbing trees while everybody else in the...

Natureview Farm It was a crisp Vermont morning in February 2000. Christine Walker, vice president of marketing for Natureview Farm, Inc., a small yogurt manufacturer, paused to collect her thoughts...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.60 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indenitely. If investors require...

Problems 6 & 8 Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a $2 dividend. Which do you think will have a higher price, a share of the preferred or a...

Bonds issued by VIX Industries have a par value of $1,000. The bonds are currently selling for $885.50. They have 10 years remaining to maturity. The coupon rate is 8% and the coupon payment is paid...

Hi there, can you please answer these parts showing the steps taken in a clear way. Will give upvote. Thanks :D Question 1 A) XYZ stock currently sells for $50 per share. The next expected annual...

A) XYZ stock currently sells for $50 per share. The next expected annual dividend is $2, and the growth rate is 6%. What is the expected rate of return on this stock? If the required rate of return...

my question is Q 1, stock values, thank you ! Chapter 8 Stock Voltion 7. Growth Rate growth rate in & Voting Rights between U.S. Po 9. Corporate F h Rate In the context of the dividend growth model,...

The speed S of blood that is r centimeters from the center of an artery S = C(R = r) where C is a constant, Ris the radius of the artery, and S is measured in centimeters per second. After a drug is...

Mirah Company compiled the following financial information as of December 31, 2020: Revenues Owner's Capital (1/1/20) $340,000 140,000 80,000 240,000 90,000 20,000 20,000 40,000 70,000 Equipment...

Current Attempt in Progress Sandhill Company estimates that variable costs will be 6 0 % of sales, and fixed costs will total $ 5 2 8 , 0 0 0 . The unit selling price of the product is $ 5 . ( a )...

Using Table 8.4, select possible liquid liquid extraction solvents for separating the following mixtures: (a) Waterethyl alcohol, (b) Wateraniline, and (c) Wateracetic acid. For each case, indicate...

Draw and label the given streams and derive expressions for the indicated quantities in terms of labeled variables. The solution of part (a) is given as an illustration. (b) The feed to a batch...

Solve Exercise 8.11 with a right-triangle diagram. In Exercise 8.11 One thousand kilograms per hour of a 45 wt% acetone in- water solution is to be extracted at 25?C in a Continuous, countercurrent...

For each of the ternary systems shown in figure, indicate whether: (a) Simple, countercurrent extraction, or (b) Countercurrent extraction with extract reflux, or (c) Countercurrent extraction with...

Determine the force in each cable and the force F needed to hold the lamp of mass M in the position shown. Hint: First analyze the equilibrium at B; then, using the result for the force in BC,...

How do ECRHs branding strategies affect consumer choice and bargaining power?

Design a three-phase heater with suitable symmetric loads using wye-connected pure resistance. Assume that the heater is supplied by a 240-V line voltage and is to give 27 kW of heat.

Convert the circuits in Fig. 2.112 from Y to ?

Find vo, and io in the circuit of Fig. 3.108. Figure 3.108 50 10 10 44, 100 V (+ 2 A

5.24. Example 5.5 (page 120) analyzed data from a study that compared therapies for anorexia. For the 17 girls who received the family therapy, the changes in weight during the study were...

5.4. A national survey conducted in July 2006 by Pew Forum on Religion & Public Life asked whether the subject favored allowing homosexual couples to enter into civil unionslegal agreements that...

5.20. Find and interpret the 95% confidence interval for jtr. ify = 70 and x = 10, based on a sample size of (a) 5 (b) 20.