Purchase Solution

Current stock price

Not what you're looking for?

Ask Custom Question

4. The Zumwalt Company is expected to pay a dividend of $2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price?

a. $42.25
b. $43.31
c. $44.39
a. $45.50
b. $46.64

Purchase this Solution
Solution Summary

The solution explains how to calculate the current stock price

Solution Preview

The current price is the present value of all dividends. When dividends grow at a constant rate we ...

Purchase this Solution
Free BrainMass Quizzes
IPOs

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

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

View More Free Quizzes
Related BrainMass Solutions

  • BrainMass Expert's Approach to: Stock valuation

    We first find the current price using the dividend discount model Current price = D1/(rs-g) Where D1=0.50 rs = required return = 12% g = growth rate = 7% Current Price = 0.50/(12%-7%) = $10 The growth rate g gives the increase in stock price.

  • Estimating the current and expected stock price

    current and expected price of given stock.

  • Valuation of Preferred Stock - Current and original Value

    14% = $6/ Current Price Solving we get Current Price = $6 / 14% = $42.86 If the yield on the Standard & Poor's Preferred Stock Index declines, how will the price of the preferred stock be affected?

  • Market Value Ratio - Lane Inc

    If Lane's forecast turns out to be right, and its price/earnings (P/E) ratio does not change, what does Lane expect its stock price to be one year from now? Current Price earnings ratio= Current stock price/Current EPS.

  • Preferred Stock Value

    We get 6% = 6/Issue Price Issue Price = 6/.06 = $100 What is the current value of this preferred stock? The current yield is 14%. The dividend amount remains the same at $6. We get 14% = 6/Current Price.

  • Calculating the market price of a stock

    price of stock=Po=D1/(r-g)=$45.65 b) Current market price is lower than estimated price, I would prefer to buy the stock.

  • Analyzing Stock Based on EPS

    What was the observed current stock price (in dollars) when the earnings per share was 30.83 dollars? From the regression equation, what is the predicted current stock price (in dollars) when the earnings per share is 30.83 dollars?

  • The answer to preferred stock

    We get 6% = 6/Issue Price Issue Price = 6/.06 = $100 2. What is the current value of this preferred stock? The current yield is 14%. The dividend amount remains the same at $6. We get 14% = 6/Current Price.

  • What are the option's market value and the price of stock?

    Exercise value = Current stock price - Strike price 22 = Current stock price - 15 Current stock price = 37 This solution is comprised of a detailed explanation to answer what are the option's market value and the price of the stock.

  • Current price and holding period

    How would that affect the current price of the stock? Explain. The holding period does not make a difference to the current price of a stock.

View More Related Solutions