Given dividend and growth rate, what is market price of stock? Sharon Smith's annuity
Not what you're looking for?
1. An issue of common stock has just paid a dividend of $3.75. Its growth rate is 8%. What is its price if the market's rate of return is 16%? (Show all work/calculations/formulas)
2. Sharon Smith will receive $1 million in 50 years. The discount rate is 14. As an alternative, she can receive $2,000 today. Which should she choose? Provide two solutions for this question. (Base your answer on present value calculations for the $1 million, and future value calculations for the $2,000. Use the tables in the back of your text, and show all work/calculations/formulas).
Purchase this Solution
Solution Summary
Given dividend and growth rate, the solution determines the market price of stock.
Solution Preview
Question 1:
Value of stock = $3.75*(1+8%)/(16%-8%) = $50.625
Question 2:
Future value of $2,000 = ...
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance
These questions will test you on your knowledge of finance.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Motivation
This tests some key elements of major motivation theories.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.