Explore BrainMass
Share

Explore BrainMass

    Dividend Valuation Model for New Public Issue

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    15. The investment banking firm of Luther King, Inc., will use a dividend valuation model to appraise the shares of the Pyramid Corporation. Dividends at the end of the current year will be $1.20. The growth rate is 9 percent and the discount rate is 13%.

    a. What should be the price of the stock to the public?

    b. If there is a 6 percent total underwriting spread on the stock, how much will the issuing corporation receive?

    c. If the issuing corporation receives a net price of $29 (proceeds to the corporation) and there is a 6 percent underwriting spread, what would be the price of the stock to the public?

    © BrainMass Inc. brainmass.com October 9, 2019, 11:55 pm ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/dividend-valuation-model-new-public-issue-272412

    Solution Summary

    The solution computes Dividend Valuation Model to appraise the share,underwriting share.

    $2.19