Purchase Solution

Determining price of stock

Not what you're looking for?

Ask Custom Question

A share of common stock has just paid a dividend of $4.00. If the expected long-run growth rate for this stock is 15 percent, and if investors require a 19 percent rate of return, what is the price of the stock?

What would be the correct formula for figuring out this problem? I derived at $57.50 but that isn't correct. What is the correct stock price?

Purchase this Solution
Solution Summary

The solution explains how to calculate the price of a stock using the dividend discount model

Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Lean your Process

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

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.

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.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Required Rate of Return on a Company's Stock

    = 0.074074 For determining the cost of debt, please use the following formula in Excel: =RATE(Period, Coupon Payment, Present Value, Future Value) =RATE(10,.07*1000,-1280,1000) =3.61% For determining the cost of equity use the formula: Price

  • Stock prices dynamics

    The prices of stocks cannot be predicted with accuracy. They are based on several factors. The fundamental way to price stock is by determining the present value of long term cash flows.

  • rate of return p/e rations

    Find the price of the stock. 1. Determining required rate of return. D0=$2.75 P0=$19.00. g=5%. Ke=D0*(1+g)/P0+g =2.75*(1+5%)/19+5%=20.2% 2.

  • Probability distribution for the stock price

    461589 Determining the probability distribution for the stock price A stock price is currently $50. Assume that the expected return from the stock is 18% and its volatility is 30%. What is the probability distribution for the stock price in 2 years?

  • How do you calculate the new price of a share after a stock split?

    This solution provides calculations, answers and explanation for determining the price of a stock after a stock split.

  • Price of Stock Range of Variables

    What is the current price of the common stock? Price of Stock Need help determining stock values based on a range of variables...

  • Determining the Ex-Dividend Price

    305239 Determining ex-dividend price A model that incorporates tax effects into determining the ex-dividend price is; (P0-Px)/D=(1-Tp)/(1-Tg) where P0 is the price just before the stock goes ex, Px is the ex-dividend share price, D is the amount the

  • Price of stock

    Note: Price/book value =4 Thus the market value = Book value *4 =$5million *4 =5000000*4 =$20000000 This solution assists in determining the price of a share of stock.

  • Common Stock of Coquihalla Corporation

    498723 Determining the stock price Common Stock of Coquihalla Corporation will pay a dividend of $8.00 in the upcoming year, and dividends are expected to grow 5% per year in the future. Your required rate of annual return is 12% .

View More Related Solutions