Constant-Growth Model. Fincorp will pay a year-end dividend of $4.80 per share, which is expected to grow

Question:

Constant-Growth Model. Fincorp will pay a year-end dividend of $4.80 per share, which is expected to grow at a 4 percent rate for the indefinite future. The discount rate is 12 percent.

a. What is the stock selling for?

b. If earnings are $6.20 a share, what is the implied value of the firm’s growth opportunities?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Study Guide To Accompany Fundamentals Of Corporate Finance

ISBN: 9780073012421

5th Edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

See More Books

Question Posted: Jun 05, 2024 02:02 AM

See More Questions

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...
Subject : Strategic Management in a Global Environment Safaricom: Innovative Telecom Solutions to Empower Kenyans As the largest mobile provider in Kenya, Safaricom has touched the lives of Kenyans...
A business starts this year with P1,000,000 assets with no debt. The expected ROE equals 10%. Suppose the firm decides to have a payout of 40% for this year. How much is the expected total dividends...
If Y (p) is the laplace transform of y(t), which is the solution of the initial value problem { + y(t) = - dt p+1 1+p sin t satisfying y (0) = 1 and y'(0)=0, then the Y(p) equals P -2p + 1+p (1+p) ...
Empirical work suggests that labor demand is very elastic while labor supply is very inelastic. Assume too that payroll taxes are about 15% and legislated to be paid half by the employee and half by...
When parallelizing an application, the ideal speedup is speeding up by the number of processors. This is limited by two things: percentage of the application that can be parallelized and the cost of...
Complete the following descriptions by filling in the blanks 1. Consolidated show the financial position, results of operations, and cash flows of all entities under the parent's control, including...
Sulfur dioxide is oxidized to sulfur trioxide in a small pilot-plant reactor. SO 2 and 100% excess air are fed to the reactor at 450C. The reaction proceeds to a 65% SO 2 conversion, and the products...
Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities . The following selected...
P/E Ratios. No-Growth Industries pays out all of its earnings as dividends. It will pay its next $4 per share dividend in a year. The discount rate is 12 percent. a. What is the price-earnings ratio...
P/E Ratios. Web Cites Research projects a rate of return of 20 percent on new projects. Management plans to plow back 30 percent of all earnings into the firm. Earnings this year will be $2 per...
Electrons in bonding molecular orbitals are most likely to be found in the region between the two bonded atoms. Why does this arrangement favor bonding? In a antibonding orbital, where are the...
Watch Tre'Shawn's story (The QR code is in your text) https://www.youtube.com/watch?v=smIZLtDSPhU Using Chart 3.2 in your textbook describe what typical development for a 14-year-old boy would be...
Q17. An insurance company charges $500 for an insurance policy against fire and theft in the home. If a home is destroyed by fire, then the insurance company will pay the homeowner $250,000. What is...
If y = x ( 9 x + 5 ) , compute y ' .
1. Print out your name and section. 2. Create a java code to find speed of a car. a. Import the required codes to allow the user to enter data. b. The formula for speed is speed=distance/time. c. Ask...
Complete the square for 9 x 2 - 9 0 x + y 2 + 8 1 = 0
Listed here are data for five companies. These data are from companies annual reports for the fiscal year indicated. The market price per share is the closing price of the companies stock as of April...
(a) With not more than 300 words, examine why Malaysia missed its 2020 targets to divert 40% of waste from landfills and increase recycling rates to 22%. (10 marks) b) Why arent Malaysian recycling?...
Assume that an investment of $100,000 is expected to grow during the next year by 8% with SD 20%, and that the return is normally distributed. Whats the 5% VaR for the investment? A. $24,898 B....
Simpson Ltd is a small IT company, which has 2 million shares outstanding and a share price of $20 per share. The management of Simpson plans to increase debt and suggests it will generate $3 million...
The following are the information of Chun Equipment Company for Year 2 . ( Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated. ) Salaries...

Constant-Growth Model. Fincorp will pay a year-end dividend of $4.80 per share, which is expected to grow

Question:

Step by Step Answer:

Study Guide To Accompany Fundamentals Of Corporate Finance

Students also viewed these Business questions