Purchase Solution

Current price of a share

Not what you're looking for?

Ask Custom Question

Consider the stock of Davidson Company, which will pay an annual dividend of $2 one year from today. The dividend will grow at a constant annual rate of 5 percent, forever. The market requires a 12 percent return on the company's stock.

a. What is the current price of a share of the stock?
b. What will the stock price be 10 years from today?

Purchase this Solution
Solution Summary

This provides the steps to compute the current price of a share

Solution Preview

What is the current price of a share of the stock?
Po=Div1/(ke-g)
ke=cost of ...

Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Change and Resistance within Organizations

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

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

View More Free Quizzes
Related BrainMass Solutions

  • Analyzing Stock Based on EPS

    According to the regression equation, for an increase of one dollar in earnings per share, there is a corresponding increase of how many dollars in current stock price?

  • Amigo Software

    a) Compare book value (net worth) per share b) If there is $48,000 in earnings available to common stockholders and the firm's stock has a P/E of 20 times earnings per share, what is the current price of the stock?

  • Price of stock

    143226 What is the current price of a share of stock for a firm with a $5 million What is the current price of a share of stock for a firm with a $5 million in balance-sheet equity, 500,000 shares of stock outstanding , and a price/book value of 4?

  • Description of Share Price

    After repaying the debt, what will Baruk's share price be? a. The current share price would reflect the market value of equity. Total value of assets is $81 million and the value of debt is $36 million.

  • Fundamental Stock Analysis

    Dividend per share: $1.125 Current stock price: $45.00 Therefore Dividend yield= Dividend per share / Price per share= 2.50% =1.125/45 4) Dividend per share: 1.125 This means that for every share that a person holds,

  • Stock split, stock dividend, reverse stock split

    5 for 3 stock split No of current shares= 400,000 Total no of new shares= 666,667 =(5/3)*400000 Total value= $36,000,000 Price per share= $54.00 Answer: Share price= $54.00 =36000000/666667 B.

  • Summary/conclusion/recommendation the company financial

    Roll Market value ratios 2008 Market Price of common stock at year-end 2008 = 24 2008 Earning per share = 0.68 PE(price/earning) = Market price per share/earning per share = 24/0.68 = 35.29 Book value per share = stockholder's equity/# of share

  • Calculating price of stock

    If the required return is 13 percent and the company just paid a $1.80 dividend, what is the current share price? 1.)The Jackson-Timberlake wardrobe Co. just paid a dividend of $1.95 per share on its stock.

  • XYZ Corporation - Managerial Finance

    This solution is comprised of a detailed calculation to find the current price of stock, dividends per share, and earnings per share.

  • Stock Offerings

    a) when shares are issued at $40 Number of existing shares= 10,000 Current share price= $40 Market value of shares before issue= $400,000 =10000x40 Number of new shares issued= 5,000 Share price at which new

View More Related Solutions