Purchase Solution

Stock Price for a no growth firm

Not what you're looking for?

Ask Custom Question

Company X is a no growth firm. It is expected to provide a constant earnings per share of $30. If all earnings are paid out as dividends and the required rate of return on equity is 15%, calculate the current price per share for the stock.

a) $45
b) $100
c) $150
d) $200
e) Not enough information to answer the question
f) There is enough information provided but none of the answers above is correct

Purchase this Solution
Solution Summary

The solution computes the stock price for a no growth firm.

Solution Preview

We know that Net present value of growth opportunities caan be calculated as: NPVGO = P1 - EPS / r where P1 is the current share ...

Purchase this Solution
Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Introduction to Finance

This quiz test introductory finance topics.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Multiple choice: Cost of capital, asset level, CGM, source o

    If the firm has $18 million in retained earnings, at what asset level will the firm need to issue stock? (Assume no growth in retained earnings.) a. The firm should have already issued additional stock. b.

  • Dividend Discount Model

    It is expected to experience no growth for the next 2 years as it identifies its market and acquires its inventory.

  • Stock Valuation: Nonconstant Growth

    207177 Stock Valuation: Nonconstant Growth Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 15 years, because the firm needs to plow back its earnings to fuel growth.

  • Payout stock price, calculate ratios, growth rate, merger

    True This solution is comprised of a detailed explanation to answer what price is Payout stock selling for today, what price will it sell for tomorrow, find the sustainable and internal growth rates for a firm, find what is the maximum possible growth

  • Price per share of a no growth firm

    274516 Price per Share of a No Growth Firm Company X is a no growth firm. It is expected to provide a constant earnings per share of $30.

  • valuation based on comparable trades of companies

    Equity Level MV firm/sales (X) 1.26 Firm Level Now calcuate the stock price for Ametek using each of the above multiples: 1.

  • Encore International Case

    They warned that competition is fierce in the fashion industry and that the firm might encounter little or no growth in the future. They estimated that stockholders also should expect no growth in future dividends.

  • Capital Structure: Repurchase of stock

    If it moves to a capital structure with 30% debt, based on market values, its cost of equity, rs, will increase to 11% to reflect the increased risk. Bonds can be sold at a cost, rd, of 6%. Tivoli is a no-growth firm.

  • Stock price using Constant-Growth Model

    23937 Stock price using Constant-Growth Model. a. What are the dividend payout ratios for each firm? b. What are the expected dividend growth rates for each firm? c. What is the proper stock price for each firm?

View More Related Solutions