Solved: Determining the current stock price, Finance Basics

Determining the current stock price

Please assist with the following problem.

The dividend per share in one year is $2. In year two it is $4 a share. Then the dividend will grow at 5% per year after that. The expected rate of return is 12%.

Q1. What is the current stock price?

Q2. What is the expected price of the stock in one year?

Q3. The expected return of 12% equals dividend yield plus capital appreciation

Please show formula and calculation in simple terms.

View Complete Question

Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the current stock price

Reference No:- TGS01451792

Now Priced at $20 (50% Discount)

Recommended (90%)

Rated (4.3/5)

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Finance Basics

Q : Concept of the contribution margin

When considering a large bulk order, how should one use the concept of contribution margin to decide which cookie's production to reduce in order to free up enough capacity to accept the bulk order? Under what circumstances should she not have acc

Q : Private placement problem

Problem: Which of the following statements is most correct? a. In a private placement, securities are sold to private (individual) investors rather than to institutions. b. Private placements occur most frequently in stock issues, but bonds can also

Q : Discussing changes in the financial services sector

Problem: Discussing changes in the financial services sector. Put particular focus on major changes in banking laws, how the Internet is impacting the industry, industry consolidation, and international banking.

Q : Business problems based on research and evaluation

I specialize in solving business problems based on research and evaluation. I have just been hired by the new president of Playword Greeting Cards, an established company that sells greeting cards and collectibles to its own line of company-owned

Q : Determining the current stock price

The dividend per share in one year is $2. In year two it is $4 a share. Then the dividend will grow at 5% per year after that. The expected rate of return is 12%. Q1. What is the current stock price?

Q : What is the debt to equity ratio after each restructuring

a What is the debt to equity ratio after each restructuring? b. If EBIT is either $90,000 or $130,00 what is the earning per share for each financing mix for both possible value of EBIT?

Q : Dow jones industrial average and the nasdaq

I saw on the news that the Dow Jones Industrial Average was down 100 points and that the NASDAQ was up 10 points." What exactly are the Dow Jones Industrial Average and the NASDAQ, and how can one be up and the other be down?

Q : What is the dividend pay-out ratio

Problem 1. Net income is $55,000, dividends paid are $8,000; what is the dividend pay-out ratio? Problem 2. You own 200 shares of Easy stock that has a current market price of $25/share. What is the value of your holdings after a 15% stock dividend

Q : Inventory management and average cash balance

Problem: Throughout the course of the year, my various projects will require a total amount of cash of $4,000,000. The interest cost for this requirement is 9.75%, while each transaction costs $100 to complete.

1934983

Questions
Asked

3,689

Active Tutors

1449571

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the current stock price

Reference No:- TGS01451792

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Concept of the contribution margin

Q : Private placement problem

Q : Discussing changes in the financial services sector

Q : Business problems based on research and evaluation

Q : Determining the current stock price

Q : What is the debt to equity ratio after each restructuring

Q : Dow jones industrial average and the nasdaq

Q : What is the dividend pay-out ratio

Q : Inventory management and average cash balance

What facilitate a stable, safe, pain-free cervical posture

Interview a bsn-prepared nurse

Does the patient have pearl pupils

Teaching a client with osteoarthritis about self-management

Nurse teaching client with hiv receiving antiretroviral

Nurse is planning care for client who had hip replacement

Describe nurse is caring for a client with hemophilia

Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the current stock price

Reference No:- TGS01451792

Recent Questions Asked Finance Basics

Q : Concept of the contribution margin

Q : Private placement problem

Q : Discussing changes in the financial services sector

Q : Business problems based on research and evaluation

Q : Determining the current stock price

Q : What is the debt to equity ratio after each restructuring

Q : Dow jones industrial average and the nasdaq

Q : What is the dividend pay-out ratio

Q : Inventory management and average cash balance

Asked Questions