Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jan 20, 2021

ABC common stock is expected to have extraordinary growth in earnings and dividends of 20% per year for 2 years, after which the growth rate

ABC common stock is expected to have extraordinary growth in earnings and dividends of 20% per year for 2 years, after which the growth rate will settle into a constant 6%. If the discount rate is 15% and the most recent dividend was $2.50, what should be the approximate current share price?

$31.16
$33.23
$37.39
$47.77

Step by Step Solution

★★★★★

3.46 Rating (149 Votes )

There are 3 Steps involved in it

Step: 1

Most recent dividend D0 250 growth rate for 2 years 20 So D1 250120 ... blur-text-image

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Materials Science and Engineering

Essentials of Materials Science and Engineering

Authors: Donald R. Askeland, Wendelin J. Wright

3rd edition

978-1111576868, 1111576866, 978-1285677620, 1285677625, 978-1111576851

More Books

Students also viewed these Corporate Finance questions

Question

★★★★★

If you borrow $1600 for 2 years at 14% annual simple interest, how much must you repay at the end of the 2 years?

Answered: 1 week ago

Question

★★★★★

If a firm is expected to have a profit margin of 8 percent but trades at a price-to sales ratio of 25, what inferences would you make?

Answered: 1 week ago

Question

★★★★★

A new project is expected to have an 8-year economic life. The project will have an initial cost of $100,000. Installation and shipping charges for the equipment are estimated at $10,000. The...

Answered: 1 week ago

Question

★★★★★

During the software design phase, software engineers define details about the product construction, behavior, components, and interfaces. Explain how you can use the Unified Modeling Language (UML)...

Answered: 1 week ago

Question

★★★★★

A vertical piston/cylinder has a linear spring mounted as shown so at zero cylinder volume a balancing pressure inside is zero. The cylinder contains 0.25 kg air at 500 kPa, 27oC. Heat is now added...

Answered: 1 week ago

Question

★★★★★

Apply your knowledge of tax law to other areas of the United States Code, given that sometimes an accountant might need to access other parts of the United States law: a. 15 U.S.C., chapter 2B,...

Answered: 1 week ago

Question

★★★★★

=+a) What are the main differences between this model with John Carter removed and the model from Exercise 7 with it included?

Answered: 1 week ago

Question

★★★★★

In the audit of Potomac Mills, the auditors wish to test the costs assigned to manufactured goods. During the year, the company has produced 2,000 production lots with a total recorded cost of $5.9...

Answered: 1 week ago

Question

★★★★★

The current yield is defined as the annual interest on a bond divided by which one of the following? coupon face value market price call price dirty price

Answered: 1 week ago

Question

★★★★★

When Pablo Gonzalez died unmarried in 2018, he left an estate valued at $7,850,000. His trust directed distribution as follows: $20,000 to local hospital, $160,000 to his alma mater, and the...

Answered: 1 week ago

Question

★★★★★

Question list K Tolman Lager has just purchased the Jacksonville Brewery. The brewory is 2 years old and uses absorption costing. It will "sell" its product to Tolman Lagor at $46 per barrel. Peter...

Answered: 1 week ago

Question

★★★★★

Brainstorm how mental health and wellness professionals can enhance the success and longevity of nonprofit organizations in this field through effective budgeting practices. Consider the role of...

Answered: 1 week ago

Question

★★★★★

Question 9 Explain by means of what will you prepare the compressed air systems for service? (5)

Answered: 1 week ago

Question

★★★★★

Given that q(x) = 10x-6 2x-2 find (91) (6) using the Inverse Function Theorem. Note that q(3) = 6. (Do not include "(q) (6) =" in your answer.)

Answered: 1 week ago

Question

★★★★★

On January 1, 2024, Hobart Manufacturing Company purchased a drill press at a cost of $36,000. The drill press is expected to last 10 years and has a residual value of $6,000. During its 10-year...

Answered: 1 week ago

Question

★★★★★

1. Consider the series 2n+3 2n+5 Decide en en+1 n=1 [2 marks] whether it converges or diverges; if it converges, find the limit. 2. f(2) = 82-3n 27" n=1 Throughout it, let be the function defined by...

Answered: 1 week ago

Question

★★★★★

On 1-1-2021 under its restricted stock unit (RSU) plan, Granger Corporation granted restricted stock units (RSUs) representing 3,000 shares of Granger's common stock to key employees. The vesting...

Answered: 1 week ago

Question

★★★★★

d) For die casting processes: 1. What are the most common metals processed using die casting and discuss why other metals are not commonly die casted? 2. Which die casting machines usually have a...

Answered: 1 week ago

Question

★★★★★

Isothermally transformed eutectoid steel is found to have yield strength of 410 MPa. Estimate (a) The transformation temperature; and (b) The inter lamellar spacing in the pearlite.

Answered: 1 week ago

Question

★★★★★

The following data were collected from a 0.4-in.-deameter test specimen of polyvinyl chloride (l0 = 2.0 in.): After fracture, the total length was 2,09 in., and the diameter was 0.393 in. Plot the...

Answered: 1 week ago

Question

★★★★★

Titanium is stiffer than aluminum, has a lower thermal expansion coefficient than aluminum, and has a higher melting temperature than aluminum. On the same graph, carefully and schematically draw the...

Answered: 1 week ago

Question

★★★★★

An Internet service provider states that the average number of hours its customers are online each day is 3.75. Suppose a random sample of 14 of the companys customers is selected and the average...

Answered: 1 week ago

Question

★★★★★

Championship Billiards, owned by D & R Industries, in Lincolnwood, Illinois, provides some of the finest billiard fabrics, cushion rubber, and component parts in the industry. It sells billiard cloth...

Answered: 1 week ago

Question

★★★★★

A population has a mean of 125. If a random sample of 8 items from the population results in the following sampled values, what is the sampling error for the sample?

Answered: 1 week ago

Previous Question Next Question