FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your task is to value the stock price of Harrington Ltd with the Dividend Discount Model (DDM) in stable growth. You have the following information:

Your task is to value the stock price of Harrington Ltd with the Dividend Discount Model (DDM) in stable growth. You have the following information:

Dividends per share DIV0

1.89

Risk-free rate rF

3.00%

Beta

1.182

Expected return on stocks

8.50%

Estimated long-term dividends growth rate

2.75%

Required: (a) Calculate the value of the stock of Harrington Ltd using the Dividend Discount Model (DDM) in stable growth; (b) The stock currently trades at 39.40 in the stock market; would you recommend buying it?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Investment Analysis and Portfolio Management

Investment Analysis and Portfolio Management

Authors: Frank K. Reilly, Keith C. Brown

10th Edition

538482109, 1133711774, 538482389, 9780538482103, 9781133711773, 978-0538482387

More Books

Students also viewed these Finance questions

Question

★★★★★
1. Which other companies are using approaches similar to the one used by Austin Peay State? 2. Based on which data does the system makes a course recommendation to a student? 3. How many courses are...

Answered: 1 week ago

Question

★★★★★
O X + ber Calendar My MCBS Library English (en) Probability and Statistics er Session II 2021/MAT 105/E3 / General / Final Exam Current estimates suggest that 70% of the home-based computers in a...

Answered: 1 week ago

Question

★★★★★
2. Can some nonverbal communication be controlled while other nonverbal communication is uncontrollable?

Answered: 1 week ago

Question

★★★★★
Zoop Corporation purchased for $300,000 a 30% interest in Murphy, Inc. This investment enables Zoop to exert significant influence over Murphy. During the year Murphy earned net income of $180,000...

Answered: 1 week ago

Question

★★★★★
Consider the case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing the currently has 30,000 shares of common stock outstanding its management believes that is current stock price of $90 per...

Answered: 1 week ago

Question

★★★★★
Overhead Photography has applied for property and liability insurance. Overhead provides drone inspection services for insurers, architectural firms, and other entities that want to obtain...

Answered: 1 week ago

Question

★★★★★
Question 7 Not checked Mark 1.00 out of 20.00 P Flag question Take me to the text On November 1, 2018, Precision Machinery purchased equipment for $117,000. The equipment is expected to last 5 years...

Answered: 1 week ago

Question

★★★★★
Muy Bueno Bakery sells its special chocolate cake for $ 1 8 variable cost is $ 3 . The desired profit is $ 2 per unit. What is the markup percentage ( rounded to the nearest percent ) on product...

Answered: 1 week ago

Question

★★★★★
Instructions: Interview a manager in a role that is responsible for supervising staff and prepare a report summarizing the interview: 1. You will need approximately 30. minutes to interview the...

Answered: 1 week ago

Question

★★★★★
Sam is surfing the Internet and sees that this favorite local skateboard company, Smoothride, Inc., does not own the domain name, "Smoothride.com." Sam registers the name at www.godaddy.com, a domain...

Answered: 1 week ago

Question

★★★★★
D Question 29 3 pts In the Congo, the infant mortality rate is 5.934%. Suppose that a random sample of 1000 births was conducted, What is the probability that the infant mortality rate was less than...

Answered: 1 week ago

Previous Question Next Question