4. Apple's stock is expected to pay a dividend of $2.15 at the end of the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
4. Apple's stock is expected to pay a dividend of $2.15 at the end of the year, and the dividend is expected to grow at 11.2% per year forever. The return on the short term T- bill is 3% and the expected return on the S&P500 is 11.40% and the Apple beta is 1.4524. (20 points) a) What is the current price of Apple stock? b) If an investor were to buy Apple stock now and sell it after receiving a dividend of $2.15 a year from now. What is the expected capital gain in percentage terms? What is the dividend yield, and what is the total rate of return in investment? c) What is the expected price of Apple stock in the next two years? d) What would be your estimate of Apple's stock value if you believe that the Apple stock is riskier? 4. Apple's stock is expected to pay a dividend of $2.15 at the end of the year, and the dividend is expected to grow at 11.2% per year forever. The return on the short term T- bill is 3% and the expected return on the S&P500 is 11.40% and the Apple beta is 1.4524. (20 points) a) What is the current price of Apple stock? b) If an investor were to buy Apple stock now and sell it after receiving a dividend of $2.15 a year from now. What is the expected capital gain in percentage terms? What is the dividend yield, and what is the total rate of return in investment? c) What is the expected price of Apple stock in the next two years? d) What would be your estimate of Apple's stock value if you believe that the Apple stock is riskier?
Expert Answer:
Answer rating: 100% (QA)
a To calculate the current price of Apple stock we can use the Gordon Growth Model also known as the Dividend Discount Model DDM Current Price Dividen... View the full answer
Related Book For
1014 Practice Questions For The New GRE
ISBN: 9780375429682
2nd Edition
Authors: The Princeton Review
Posted Date:
Students also viewed these finance questions
-
A portfolio has two equally-weighted assets. Asset 1 has expected return of 12% and a standard deviation of 15%. Asset 2 has an expected return of 14% and a standard deviation of 25%. The assets are...
-
13. What is a lower bound for the price of 3-month call option on a non- dividend-paying stock when the stock price is $50, the strike price is $45, and the 3-month risk-free interest rate is 8%?...
-
1. If you own 15 000 shares of BHP Billiton Ltd (BHP) and it pays a dividend of $0.27 per share, what is the total dividend you will receive? 2. Telford Corporation has a current share price of $20...
-
what is the Low velocity zone? 1. elsic 2. Mafic 3. Partially melted rock 4. Crust 5. Pressure causes olivine to change to spinel 6. Physical boundary 7. core
-
The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike except that they are located in different...
-
Graph the solution set of each system of inequalities. 3x - 2y 6 x + y -5 y 4
-
Speed Boats Inc. has two divisions, Economy and Elite. The tax rate for the company is 40%. The following information pertains to the 2011 year: a. What is the ROI for each division? b. What is the...
-
The city of Segovia is contemplating building a second airport to relieve congestion at the main airport and is considering two potential sites X and Y. Hard Rock Hotels would like to purchase land...
-
A pizza baked at 425F is removed from the oven at 8:00 PM and placed in a room that is a constant 72F. After 5 minutes, the pizza is at 300F. (a) At what time can you begin eating the pizza if you...
-
Explain the meaning of each of the following terms. In your answer include an example to help with your explanation. a. Expansion. b. Contraction. c. Physical change. d. Sublimation. e. Diffusion. f....
-
ColdIce Limited presented their financial statements for the year ended 2 8 February 2 0 1 8 to the board of directors on 3 1 May 2 0 1 8 for approval. The following events have taken place after the...
-
1. Why does culture and diversity matter so much? 2. Why do leaders need to focus no organizational culture and employee diversity in the year 2022? 3. Define culture for a business. 4. Explain how...
-
If f(x) = 3 cos(4 ln(x)), find f'(x). Answer:
-
Organizational Cynicism Although previous researchers had examined employee cynicism toward organizational change, James Dean, Pamela Brandes, and Ravi Dharwadkar retooled the concept for a broader...
-
Organizational Development and Sense-Making Approaches from the textbook, Palmer, I., Dunford, R., & Buchanan, D. (2022). Managing organizational change: A multiple perspectives approach McGraw-Hill...
-
Organizational knowledge is the collective knowledge and abilities possessed by the people who belong to an organization. By definition, knowledge is a living type of information that is actively...
-
Map the client's crisis using the five stages of the crisis. Describe the client's assets and resources (in order to understand the client's resilience). Describe how you, the social worker, will...
-
Explain how the graph of each function can be obtained from the graph of y = 1/x or y = 1/x 2 . Then graph f and give the (a) Domain (b) Range. Determine the largest open intervals of the domain over...
-
For his birthday, Brian will receive either three or four differently colored ties, either two or three differently colored shirts, and either one or two differently colored jackets. Depending on how...
-
2, 3, 5, 7 Quantity A is greater. Quantity B is greater. The two quantities are equal. The relationship cannot be determined from the information given. Quantity A The average (arithmetic mean) of...
-
For each blank select one entry from the corresponding column of choices. Fill all blanks in the way that best completes the text. Seth was extremely _______, and did not enjoy activities that...
-
The International Accounting Standards Board and the Financial Accounting Standards Board have replaced IAS 11 Construction Contracts and IAS 18 Revenue with IFRS 15. Requirement: With reference to...
-
A supermarket awards 100 points to customers for each 100 worth of purchases in a single transaction. The customers may then exchange 1,000 points for goods with a retail value of 60; the cost to the...
-
How does one account for investment property in accordance with IAS 40?
Study smarter with the SolutionInn App