Gerald's Travel Service just paid $1.79 to its shareholders as the annual dividend. Simultaneously, to company announced that future dividends will be increased by 3.2 %. If you require a 10.5% rate of return, how much are you willing to pay to purchase one share of this stock?© BrainMass Inc. brainmass.com October 24, 2018, 10:51 pm ad1c9bdddf
The price will be the present value of all dividends, since the growth rate in ...
The solution explains how to calculate the price of stock.
The importance of Corporate valuation in the M&A process
Acquiring Company pays $35 million for all of the outstanding stock in Target Company. The fair market value of Target Company’s tangible assets is $15.00 million and the fair market value of its intangible assets is $10 million. The fair market value of assumed liabilities is $5 million. What is the value of goodwill that must be shown on the balance sheet of the combined companies?
Corporate valuation is an important step in the M&A process. This often requires the estimation of the target’s (or bidder’s) cost of capital, which usually involves estimating the company’s beta. Describe in detail how you would estimate the beta for a publicly traded firm. Be careful to address the practical issues that arise in estimating beta and how you would surmount those issues.View Full Posting Details